US' Kontoor Brands posts revenue of $2.61 bn in FY23

In the US, revenue reached $2.06 billion, also down by 1 per cent year-over-year (YoY). The US wholesale sector saw a similar 1 per cent decrease, while the DTC channel experienced a 6 per cent increase, buoyed by a 7 per cent rise in owned digital sales and a 4 per cent uplift in owned retail sales, the company said in a media release.

Internationally, revenue fell to $547 million, a 2 per cent decrease (3 per cent in constant currency) from the prior year. Notably, China saw a 7 per cent decrease (2 per cent in constant currency), with a decline in wholesale not fully compensated by DTC growth. Europe reported a 2 per cent decrease (4 per cent in constant currency), despite significant gains in owned retail and digital, due to a drop in wholesale.

The Wrangler brand maintained its global revenue at $1.75 billion, remaining steady year-over-year (YoY). US revenue for Wrangler was flat, with increases in DTC and digital wholesale balancing the books. International revenue for Wrangler modestly grew by 1 per cent (1 per cent decrease in constant currency).

Lee brand faced a tougher year, with global revenue declining by 4 per cent to $843 million. Both US and international revenues for Lee decreased by 4 per cent and 3 per cent (4 per cent in constant currency), respectively.

Gross margin for Kontoor Brands decreased by 140 basis points to 41.7 per cent on a reported basis and by 120 basis points to 41.9 per cent on an adjusted basis. Selling, general, and administrative expenses stood at $769 million, representing 29.5 per cent of revenue.

Operating income was reported at $319 million, with an adjusted figure of $334 million after accounting for a $14 million duty expense related to prior years. Excluding this charge, adjusted operating income was $348 million, or 13.3 per cent of revenue, compared to $372 million, or 14.1 per cent, in the prior year.

Earnings per share (EPS) were reported at $4.06, with an adjusted EPS of $4.26, down from the prior year's reported EPS of $4.31 and adjusted EPS of $4.49. The EPS figures for FY23 included a $0.19 charge for duty expense related to prior years.

The fourth quarter of FY23 (Q4 FY23) saw revenue of $670 million, an 8 per cent decrease (9 per cent in constant currency) from the same period last year. US revenue was particularly hit, dropping by 11 per cent. However, gross margin improved, increasing by 90 basis points to 41.7 per cent on a reported basis and by 140 basis points to 42.2 per cent on an adjusted basis.

Operating income for the quarter was $75 million on a reported basis and $81 million on an adjusted basis. Earnings per share showed a positive trend, with a reported EPS of $1.21 and an adjusted EPS of $1.28, compared to the previous year's $0.91 reported EPS and $0.88 adjusted EPS.

“Our POS performance in the US outpaced shipments in the fourth quarter and resulted in continued market share gains. However, the US wholesale environment was challenging as retailers managed inventory levels tightly against uncertain consumer spending patterns, which negatively impacted our revenue,” said Scott Baxter, president, chief executive officer and chair of Kontoor Brands. 

Fibre2Fashion News Desk (DP)