Kontoor Brands earnings surge on steady sales growth especially in the US

Kontoor Brands announced on Thursday increased 2 percent to $670 million, ​on the back of growth in global direct-to-consumer and U.S. wholesale, weighed down by a dip in international wholesale revenue.

The U.S. denim purveyor said Wrangler revenues rose 4 percent $464 million, with Wrangler U.S. up 5 percent, driven by 10 percent growth in direct-to-consumer and 5 percent growth in wholesale. Wrangler international revenue fell 3 percent, driven by a decline in wholesale partially offset by growth in direct-to-consumer.

Meanwhile, Lee brand revenue was $202 million, a 3 percent decrease compared to the prior year. Lee U.S. revenue increased 1 percent, thanks to growth in the wholesale channel, hindered by a decline in direct-to-consumer. Lee international revenue decreased 7 percent driven by a decline in wholesale and brick-and-mortar retail, partially offset by growth in digital.

For the quarter ending September 30, net income surged 19 percent to $70.5 million at the Greensboro, North Carolina-based company.

“Our third quarter results exceeded expectations driven by strong execution and business fundamentals,” said Scott Baxter, president, chief executive officer and chair of Kontoor Brands.

“The investments in our brands continue to drive market share gains, expanded distribution, category growth and new innovation platforms. Fueled by our Jeanius transformation program, momentum for the business is building, supported by increased investment capacity and capital allocation optionality that position us to deliver strong returns for stakeholders in the years ahead.”

Looking ahead, the company lifted its guidance for the full year. Annual revenue is now expected to be $2.60 billion, up from $2.57 to $2.63 billion in the prior outlook.

“We are raising our full year outlook driven by better-than-expected third quarter results, stronger profitability and cash generation,” said Baxter.

“Our business is positioned to strengthen in the fourth quarter, as evidenced by accelerating revenue growth, gross margin expansion, stronger operating earnings growth and further reductions in inventory. We will continue to manage the business conservatively in light of the uncertain environment, but remain confident in our ability to drive strong returns for the balance of the year and into 2025.”