Kontoor Brands recently reported that its first-quarter revenue dropped 5 per cent to US $631 million due to retailer inventory management practices in the US, a decline in sales of seasonal products, and a decline in sales elsewhere, especially in Europe.
US income decreased by 5 per cent. US$ 492 million, a 6 per cent decline in US wholesale income. Reduced wholesale shipments were more than offset by growth in owned brick and mortar stores as retailers closely monitored inventory levels, according to the Lee and Wrangler owner.
Similarly, overseas sales decreased by 7 per cent to US$ 139 million. Europe’s GDP shrank by 9 per cent, with a 13 per cent increase in direct-to-consumer spending more than offsetting a 13 per cent drop in wholesale. Asia saw a 7 per cent decline, with a 5 per cent decline in wholesale and a 9 per cent decline in direct-to-consumer sales. Americas outside of the US fell by 2 per cent, mostly due to a drop in wholesale. Global direct-to-consumer sales were flat, with a 5 per cent decline in owned brick-and-mortar stores offsetting a 10 per cent increase in digital sales.
Brand-wise, global revenue for the Wrangler and Lee brands was US$ 219 million and US$ 409 million, respectively, a 9 per cent and 3 per cent drop from the previous year.
Net income for the quarter ending 31st March fell 10 per cent to US $ 59.5 million, compared to the prior-year period.
“Our first quarter results were stronger than expected, driven by higher revenue, gross margin, and cash flow,” said Scott Baxter, president, chief executive officer and chair of Kontoor Brands.
Looking ahead, the American denim maker said it is raising its full-year earnings outlook driven by better-than-expected first-quarter results and stronger gross margin expansion for the balance of the year.
Revenue is expected to be in the range of US $ 2.57 to US $ 2.63 billion, reflecting a decrease of 1 per cent to an increase of 1 per cent compared to the prior year, consistent with the prior outlook.
In March, Kontoor Brands announced the appointment of Tom Waldron to the role of chief operating officer.
