Kontoor sales dip on inventory woes and Europe, raises full-year earnings outlook on improved margins

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Kontoor sales dip on inventory woes and Europe: Kontoor Brands’ first-quarter revenue was $631 million, down 5% from the previous year. U.S. store inventory management initiatives, off-season product sales, and falling foreign sales, especially in Europe, were all factors in the decline.

With a 6% decline in wholesale revenue, overall U.S. revenue fell 5% to $492 million. Owned brick-and-mortar locations did well, but merchants’ stringent inventory control meant fewer wholesale shipments overall.

Also falling was revenue from outside the US, which dropped 7% to $139 million. The fall in wholesale sales was more than offset by growth in direct sales to consumers, leading to a 9% decrease in Europe. The same was true in the non-U.S. Americas and Asia, where wholesale sales fell 2% and 7%, respectively.

Worldwide sales for the Wrangler brand fell 3% to $409 million from the previous year, while sales for the Lee brand fell 9% to $219 million.

The quarterly net profits dropped 10% to $59.5 million.

Kontoor Brands’ president, chief executive officer, and chair, Scott Baxter, was pleased with the company’s performance in the first quarter, which he attributed to improved cash flow, gross margin, and revenue. Gains in market share and improvements in POS and retailer inventories were things he noticed happening all quarter long.

The solid beginning to the year and clearer picture of gross margin growth led Kontoor Brands to boost its full-year profit forecast.

A decline of 1% to an increase of 1% from the previous year is reflected in the company’s predicted full-year sales range of $2.57 to $2.63 billion.

Tom Waldron was named COO of Kontoor Brands in March.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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