Dive Brief:
- Kontoor Brands, parent company of Lee and Wrangler, announced a Q3 revenue of $655 million last week, representing an 8% boost over last year's revenue of $607 million. Total revenue for the nine months ended Sept. 30 was $1.94 billion, up 2% from last year.
- Wrangler revenue was up 9% to $445 million for the quarter, boosted by multiple collaborations with brands including Sandro, Stroud, Mini Rodini, and Mattel’s Barbie. Scott Baxter, president, CEO and chair of Kontoor Brands, called the brand’s Barbie collab its “best and fastest-selling collaboration ever” during a call with investors.
- Lee Jeans Q3 revenue was up 5% to $208 million. Baxter attributed the increase to the brand’s outreach to a younger, more diverse audience. That included collabs with Dragon Ball Z, Roaring Wild and Daydreamer, as well as events such as a show featuring Ed Sheeran at SoFi Stadium in Los Angeles.
Dive Insight:
The Barbie boost continues to push brands forward.
Baxter said in the call that for Wrangler, “simply put, Q3 was as big of a demand creation quarter the brand has ever experienced in its 75-year history.” He highlighted the western-themed capsule and said the cowgirl-inspired collection was responsible for “further advancing Wrangler's diversification strategies to attract new and younger consumers, while remaining authentic to the brand.”
Collaborations will also be a big part of Wrangler’s Q4 strategy, said Baxter, who highlighted Wrangler’s sponsorship of the Dallas Cowboys football team, which he said on the call would “run over the next three years.” He added that the brand also had a newly announced collab with bourbon brand Buffalo Trace and a new endorsement deal with musician Lainey Wilson.
For Lee Jeans, the company plans to increase its digital campaigns “in support of Ultralux and extreme motion innovation platforms” and create a more distinct brand identity by “amplifying our focus on innovation.” The company launched its first unisex collection, a collaboration with Roaringwild, at the end of September.
Kontoor also announced it had “identified inaccuracies in processing certain transactions with U.S. Customs and Border Protection” in Q3 2023, leading to an underpayment of “certain duties owed to U.S. Customs for the 2021 to 2023 periods.” As a result, the company stated that current Q3 results “include an estimated additional $13 million duty charge related to prior periods.”
“In the third quarter, we delivered strong revenue growth and profitability that was ahead of our expectations, excluding the duty charge, reflecting the broad-based strength of our business,” Baxter said in the release. “Supported by strategic investments in our brands, U.S. POS strength continued, driving further market share gains in core U.S. wholesale. And we delivered another solid quarter in DTC, a critical growth pillar of our diversified, accretive growth strategy.”
The company stated that while impacts from near-term macroeconomic factors are uncertain, it “remains focused on execution to deliver continued strong market share gains in the U.S., to accelerate DTC growth, and to drive gross margin improvement.” As a result, its updated outlook for the remainder of 2023 includes a revenue increase of about 1% over 2022 numbers, compared to its previous outlook “of a low-single digit percentage increase.”
