Kontoor Brands Q1 sales hurt by still-recovering China market, Lee brand sales
Kontoor Brands announced on Thursday revenues for the first quarter dipped 2% to $667 million, on the back of a drop in international revenues, weighed down by a still-recovering China market post-Covid.
The maker of Lee and Wrangler denim brands said while revenue increases were made in domestic wholesale and DTC, the company's international wholesale market suffered, thanks to the continued impact of Covid-policy changes in China.
U.S. revenue the quarter was $518 million, increasing 2% over the same period in the prior year, while international revenues fell 14% to $149 million. By brand, Wrangler brand global revenue grew 3% to $423 million, and Lee revenues fell 9% to $241 million.
“We delivered first quarter results consistent with our expectations and commentary provided on the fourth quarter earnings call. As anticipated, our brands continued to gain share in the U.S. where POS outpaced shipments in the quarter. Increases domestically were muted by expected softness in International markets. In addition to share gains and positive sell through, robust performance in our own DTC during the quarter further validates that our brands are connecting with consumers and winning in a challenging marketplace,” said Scott Baxter, president, CEO, and chair of Kontoor Brands.
“We continue to assume macroeconomic pressures will weigh on consumer demand in the second half of 2023, particularly in the U.S. However, we believe that our increasingly diversified growth across channels, categories and geographies, enabled by strategic investments in DTC, demand creation and data analytics will generate more sustained, profitable growth over time. This gives us confidence in reaffirming our 2023 outlook, despite the uneven backdrop. These resilient fundamentals should, when coupled with our solid balance sheet and capital allocation optionality, uniquely position us to yield superior returns for all KTB stakeholders going forward,” added Baxter.
Looking ahead, the Greensboro, North Carolina-based company said fiscal 2023 revenue is expected to increase at a low-single digit percentage over 2022, with the first and second half performances relatively balanced.
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