Kontoor Brands reports Q2 results, raises outlook

Kontoor Brands’ second quarter revenue was 607 million dollars, down 1 percent driven by retailer inventory management actions in the US, the anticipated decrease in revenue from seasonal products and lower international revenue.

The company said that the result was partially offset by growth in direct-to-consumer, as well as an approximate two-point benefit from the earlier timing of shipments in US wholesale from the third quarter into the second quarter.

“We delivered second quarter results that exceeded our expectations driven by higher revenue, stronger gross margin expansion and cash flow generation,” said Scott Baxter, president, CEO and chair of Kontoor Brands.

Kontoor Brands ups full year outlook

“We are carrying great momentum into the second half of the year and are raising our outlook, including the impact of additional demand creation investments that will support profitable growth for the balance of the year and beyond,” added Baxter.

For the full year, the company said, revenue is expected to be in the range of 2.57 to 2.63 billion dollars, representing a decrease of 1 percent to an increase of 1 percent.

Adjusted gross margin is now expected to approximate 44.8 percent versus 44.6 percent prior, representing an increase of 230 basis points. Adjusted operating income is now expected to be at the higher end of the prior range of 377 to 387 million dollars, representing an increase of 10 to 11 percent.

Adjusted EPS is now expected to approximate 4.80 dollars, representing an increase of 8 percent compared to the prior year on an adjusted basis.

Kontoor Brands reports revenue drop across markets The company’s revenues in the US was 496 million dollars, down 1 percent since growth in direct-to-consumer was more than offset by a 1 percent decline in wholesale revenue due to reduced shipments.

International revenue was 111 million dollars, a 6 percent or 5 percent decrease in constant currency compared to the prior year. Europe decreased 5 percent, with 3 percent or 4 percent constant currency growth in direct-to-consumer more than offset by an 8 percent decline in wholesale.

Asia decreased 13 percent or 10 percent in constant currency, with a 26 percent or 24 percent constant currency decrease in wholesale partially offset by a 4 percent or 8 percent constant currency increase in direct-to-consumer.

Non-US Americas increased 2 percent or 3 percent in constant currency driven by growth in wholesale. International direct-to-consumer increased 3 percent or 5 percent in constant currency, with 25 percent or 28 percent constant currency growth in digital partially offset by an 11 percent or 9 percent constant currency decrease in the company-owned brick-and-mortar stores.

Kontoor Brands posts growth in Wrangler, Lee declines

Wrangler brand global revenue was 429 million dollars, a 1 percent increase compared to the prior year. Wrangler US revenue was flat, with 10 percent growth in direct-to-consumer offset by a 1 percent decline in wholesale.

Wrangler international revenue increased 7 percent, driven by 13 percent or 14 percent constant currency growth in direct-to-consumer and 6 percent growth in wholesale.

Lee brand global revenue was 175 million dollars, a 7 percent or 6 percent constant currency decrease compared to the prior year. Lee US revenue decreased 3 percent driven by reduced shipments to the wholesale channel and a decline in direct-to-consumer. Lee international revenue decreased 13 percent or 11 percent in constant currency.

Gross margin increased 410 basis points to 44.7 percent on a reported basis and increased 420 basis points to 45.2 percent on an adjusted basis.

Operating income was 75 million dollars on a reported basis. On an adjusted basis, operating income was 80 million dollars, an increase of 10 percent compared to the prior year. Adjusted operating margin of 13.1 percent increased 140 basis points compared to the prior year.

Earnings per share (EPS) was 92 cents on a reported basis. On an adjusted basis, EPS was 98 cents, an increase of 27 percent.