Kontoor: higher prices and ‘sourcing optimisation’ to offset tariffs
Wrangler and Lee owner Kontoor Brands has reported a 1% dip in first quarter revenues to $623 million.
US revenue was $493 million and was flat compared to prior year. Wholesale revenue decreased 1%. Direct-to-consumer increased 11% driven by a 17% increase in digital partially offset by a 4% decrease in brick-and-mortar retail.
International revenue was $130 million and decreased 7%.
Despite the flat results, CEO Scott Baxter called the results “strong”.
He said: “We continued to strengthen our brands, drive market share gains, and grow our presence across categories and channels of distribution. And, the strength of our gross margin drove strong underlying earnings growth, cash generation and further improvement in our returns on capital.”
Based on recently enacted tariff policy changes, the company expects an estimated $50 million unmitigated impact to full year 2025 operating income, including the tariff impact of Helly Hansen. It expects to begin to offset this in the third quarter through a combination of price increases, sourcing and production optimisation, inventory management, supplier partnerships and other initiatives. It expects to substantially offset the impact over a 12 to 18 month period.
Mr Baxter added: “We expect the near-term operating environment to remain volatile and tariff policy changes present a significant headwind to our business. However, with the team and strategy we have in place, we are well-positioned to successfully manage through this environment and emerge stronger. Our first quarter results were stronger than expected, and we remain on track to deliver the full year outlook we provided in February and have increased the expected contribution from Helly Hansen.”
