Kontoor sees double-digit rise in Q2, but lowers outlook
US denim group Kontoor Brands, the parent company behind Lee and Wrangler, has reported a 25% increase in year-on-year revenues over the second quarter (Q2) ended July 2.
Although it achieved $614 million for the three-month period, this figure did fall short of the expected range of between $640 million and $650 million, causing Kontoor to lower its full-year outlook by 4%. It now expects a 6% increase over fiscal 2021's figures, as opposed to earlier expectations of a 10% rise.
Company president, chief executive and chair, Scott Baxter, commented that its top line had felt the effects of increased supply chain challenges and inflationary pressures “a bit sooner than expected”.
The group’s US and international revenues were around $510 million and $103 million, respectively. Although wholesale gains in the former market drove year-on-year growth of 40%, the latter declined by 18%. At country level, Kontoor attributed China’s covid-related lockdowns as reason for a 50% drop-off in revenues in the market.
European revenues, meanwhile, waned by 25%, which the firm said was largely due to timing shifts in relation to enterprise resource planning.
Brand-level reporting showed that revenues at Wrangler were up 34% on the year previous, reaching $418 million. Lee also experienced double-digit growth, rising by 10% year on year to $193 million in revenue.
“Looking forward, we anticipate that macro conditions will remain challenging, particularly as retailer inventories are rebalanced and inflation weighs on consumer demand,” Mr Baxter added. “However, we are confident that our strategies, continued brand momentum and efficient operating model will fuel further competitive separation over time.”
Image: Lee Jeans via Instagram.
