Kontoor Brands, parent of Wrangler and Lee, has reported a 5 per cent decrease in revenue for the first quarter, but management has raised the annual outlook following the “stronger than expected” results.
The company’s revenue was down to $631 million for the three months ended March 30, primarily driven by retailer inventory management actions in the US.
US revenue dropped 5 per cent to $492 million, while international revenue slid 7 per cent to $139 million. Europe was the biggest contributor to the global sales drop with a 9 per cent decrease, followed by declines of 7 per cent and 2 per cent in Asia and non-US Americas, respectively.
Wrangler saw global revenue drop 3 per cent to $409 million, while Lee’s sales fell 9 per cent to $219 million.
The company’s operating income was $93 million on an adjusted basis, representing a 2 per cent decrease.
“We are pleased with another quarter of market share gains and the improvement we saw in POS and retailer inventories over the course of the first quarter,” said Scott Baxter, president, CEO and chair of Kontoor Brands.
The firm has raised its full-year outlook, expecting revenue to be in the range of $2.57 to $2.63 billion, reflecting a decrease of 1 per cent to an increase of 1 per cent. Adjusted operating income is forecast to increase 8-11 per cent to $377-387 million.
“We continue to plan the business conservatively in light of the environment but are confident our brand investments and organizational efficiency will support accelerated earnings growth and free cash flow generation for the remainder of the year while maintaining significant capital allocation optionality,” Baxter added.
