Wrangler Posts First $500M Quarter – Sourcing Journal

Wrangler surpassed $500 million in sales in a single quarter for the first time, owner Kontoor Brands reported Tuesday.

In short: “We still haven’t taken our eyes off a core category standpoint,” Scott Baxter, chairman, president and CEO of Jeanswear of The Greensboro, NC, said in a fourth-quarter results conference call Tuesday, despite notable numbers to expand beyond denim. “We are still focused on our denim categories to create our demand across our consumer platforms and will continue to be so in the future.”

Kontoor’s US denim business grew 11 percent last year, while its non-denim business grew 13 percent and “now accounts for 38 percent of our global mix,” Baxter said. The company reported a 7 percent increase in international business outside of Covid-restricted China.

The denim giant is confident that “the Wrangler and Lee brands are healthy and well positioned in the market in 2023,” he said, citing strong point-of-sale and direct-to-consumer trends, with the US competitor prices are up 20 percent year to date.

“Despite the significant macroeconomic pressures in 2022, we delivered another year of healthy growth and high single digit sales growth. And we’ve returned a total of $166 million to shareholders through a combination of dividend payments,” said Baxter. Gross margin improved 230 basis points compared to 2019 adjusted gross margin, “even with the impact of inflation, supply chain challenges, retailers’ inventory adjustment and COVID lockdowns in China,” he added.

Inventory ended fiscal 2022 at $597 million, a 64 percent increase over the prior-year period and a 30 percent increase over 2019. Year-end inventory was $81 million higher than in the third quarter of last year. But most, or 90 percent, is core product, and Kontoor expects stock to be back on track by mid-year.

Tom Waldron, Wrangler’s executive vice president, co-chief operating officer and global brand presence, blamed “higher inventories” on cost inflation and less-challenged product lead times.

Wrangler, which celebrated its 75th anniversary last year, posted a quarter of over $500 million thanks to global growth of 16 percent in the fourth quarter and a 19 percent improvement in the US

“In our core business, Wrangler men’s pants continue to drive gains during the quarter, outperforming the US market by 160 basis points,” Waldron said. Sales of outdoor workwear and t-shirts were up 20 percent, with quarterly digital revenue up 18 percent.

“[D]Aversified strategies within categories, tops and non-denim bottoms, now account for over 40 percent of Wrangler’s business, driven by a 12 percent CAGR since 2019,” he said.

“The development of our outdoor product innovations, including our high-performing ATG (All Terrain Gear) line, as well as workwear women’s t-shirts and western specialties, has collectively given us greater permission to play across different categories and distribution channels and Reach new consumers like never before,” said Waldron.

Kontoor’s other well-known brand, Lee, continues to attract new customers, according to Chris Waldeck, the lifestyle label’s executive vice president, co-chief operating officer and global brand president.

“Our strategies are beginning to unlock the true potential of the brand as we continue to grow it [our] top-notch international positioning,” he said.

Global sales fell 3 percent, although US strength offset international challenges. Excluding China, global sales increased 2 percent. In the US, Lee grew 5 percent and lee.com sales grew 11 percent. Internationally, China accounted for a 13 percent decline in sales in the quarter.

“We are seeing continued improvements in the NPD market share data highlighted by Lee Women’s who reported significant market share gains in the fourth quarter,” said Waldeck.

International is a key growth catalyst for Kontoor, Waldeck said. “In the short term, you will see us continue to navigate challenging conditions, but with an eye to the future, focusing on the health of our brands and positioning each for long-term profitable growth,” he said, referring to Russia’s war in the US Ukraine and China’s post-pandemic recovery.

Weldeck said retail inventories in China continue to trend high as people return to work, although Kontoor’s own shares are in a better position. He believes Lee’s China business will overcome some early challenges by mid to late this year as “consumers return to normal daily routines and pent-up demand is released.”

“[The] The Chinese market, and more broadly Asia and Europe, represent a significant white space for Kontoor,” he said. “There is no reason why our brands shouldn’t operate at a similar level to our competitors, indicating an opportunity to double our international business over time.”

Kontoor opened three new premium Lee-Wrangler retail stores in Europe during the quarter, with the first co-branded door in Berlin. There are plans to expand the presence this year. “These brand-enhancing retail destinations offer consumers a unique immersive experience with a full lifestyle assortment for both brands,” said Waldeck.

net sales: Net sales for the fourth quarter ended December 31 increased 7 percent to $731.6 million from $681.1 million.

US revenue rose 16 percent to $605 million, with gains from both the Wrangler and Lee brands. U.S. wholesale sales increased 17 percent over the same quarter of 2021. International sales fell 20 percent to $127 million, with China contributing a 33 percent decline due to COVID impact and Europe contributing a 15 percent decline.

By brand, Wrangler’s global sales increased 15 percent to $509 million, while Lee’s global sales fell 6 percent to $219 million.

For the year, net income increased 6 percent to $2.63 billion from $2.48 billion.

Merits: Net income increased 18 percent to $51.6 million, or 91 cents per diluted share, from $43.9 million, or 75 cents, a year earlier. On an adjusted basis, earnings per share (EPS) for the quarter was 88 cents.

Wall Street expected adjusted diluted earnings per share of 67 cents on revenue of $668.8 million.

For the 2023 financial year, Kontoor expects revenue to increase in the low single-digit percentage range compared to the previous year, with growth being fairly balanced between the first and second half of the year. Growth is expected to be driven by US businesses, with continued momentum in point-of-sale, equity earnings and digital.

Earnings per share were estimated at $4.55 to $4.75. The company also expects gross margin to be in the range of 43.5 percent to 44.0 percent, up 40 to 90 basis points from a gross margin of 43.1 percent in 2022.

For the full year, net income increased 26 percent to $245.5 million, or $4.31 per diluted share, from $195.4 million, or $3.31, in the prior year.

CEO’s take: “While we anticipate ongoing macroeconomic challenges, our results provide us with great evidence that all of our key stakeholders win when we implement our playbook,” said Baxter.

https://sourcingjournal.com/denim/denim-business/wrangler-500-million-revenue-kontoor-brands-q4-lee-china-inventory-420333/ Wrangler Posts First $500M Quarter – Sourcing Journal


Nytimepost.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@nytimepost.com. The content will be deleted within 24 hours.

Related Articles

Back to top button