Kontoor Brands swings back to black as sales losses narrow

Kontoor Brands announced on Thursday revenues fell just 1 percent to $607 million for the second quarter, on the back of dropping international sales and continued inventory management actions in the U.S.

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The U.S. owner of Wrangler and Lee brands said U.S. revenue was dipped 1 percent to $496 million during the quarter with growth in direct-to-consumer sales more than offset by a 1 percent decline in wholesale revenue due to reduced shipments as retailers tightly managed inventory levels.

International revenue declined 6 percent to $111 million, hurt by Europe, down 5 percent, and Asia, which plummeted 13 percent , with a 26 percent decrease in wholesale. Non-U.S. Americas increased 2 percent, driven by growth in wholesale.

By brand, Wrangler global revenue fell 1 percent $429 million, with domestic revenues was flat, and a 7 percent lift in international revenues for the brand.

Lee global revenue was $175 million, a 7 percent decrease. Lee U.S. 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.

Despite the revenue dip, net income at the North Carolina-based company increased 42 percent to $51.8 million during the quarter ending June, 2024.

​“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, chief executive officer and chair of Kontoor Brands.

“Our fundamentals continue to improve, providing us with significant optionality to drive long-term value while returning more than $100 million to shareholders year-to-date. 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.”

Looking ahead, ​Kontoor said full-year revenue is expected to be in the range of $2.57 to $2.63 billion, reflecting a decrease of 1 percent to an increase of 1 percent compared to the prior year.