Kontoor Brands is the latest company to reveal the impact Covid-19 has had on its first quarter results.
The company, whose portfolio includes brands Wrangler and Lee, saw revenue drop 22 percent to 504 million dollars year-on-year as stores were forced to close and shoppers advised to stay indoors.
US revenue decreased by 16 percent on a reported basis to 379 million dollars. Compared with 2019 adjusted revenue, revenue was down 14 percent, but was partially offset by growth in digital, with US digital wholesale up 41 percent.
International revenue fell to 126 million dollars, down 37 percent on a reported basis and 35 percent in constant currency, with China revenue most heavily impacted.
Breaking the numbers down by brands, Wrangler’s global revenue decreased to 303 million dollars, an 18 percent decline on a reported and constant currency basis, while Lee’s global revenue decreased to 183 million dollars, a 24 percent decline on a reported and constant currency basis.
Kontoor Brands takes measures to strengthen balance sheet
“The Covid-19 global pandemic has had an unprecedented impact on the world including Kontoor’s operations and results,” president and CEO of Kontoor Brands Scott Baxter said in a statement. “Through February, results were in line with our expectations, but as the quarter progressed, impacts from Covid-19 became more pronounced. We’ve implemented several strategic actions to help navigate the near-term challenges while positioning the company for future success.
“These measures, which include the amendment of our credit facility and the related temporary dividend suspension, will provide strengthened liquidity that is paramount in these uncertain times and enable Kontoor to emerge from this crisis well-positioned to best serve the future needs of our stakeholders.”
The company said it has finished the first quarter with 479 million dollars in cash and cash equivalents, and has drawn down 475 million dollars from its revolving credit facility prior to amendment. It is also suspending its quarterly dividend.
Baxter added: “We believe Kontoor’s key retail partners remain well positioned to navigate this environment. With more than 200 years of authentic heritage, our two iconic brands offer consumers a distinct value proposition. In addition, we are highly encouraged by significant new programs and distribution gains that are expected for the second half of 2020. Our iconic brands, coupled with our cost savings efforts and scaled, agile supply chain, position Kontoor well in the marketplace.”
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