Dive Brief:
- Kontoor Brands reported $631 million in revenue for Q1, representing a 5% year-over-year decrease, according to a release Thursday.
- The company attributed the dip to retailer inventory management in the U.S., a decrease in seasonal products and lower international revenue, particularly in Europe. Despite the decline, CEO and President Scott Baxter said in the release that the results were “stronger than expected, driven by higher revenue, gross margin and cash flow.”
- Both the Lee and Wrangler brands saw revenue decreases, at 9% and 3%, respectively. Lee’s U.S. revenue decreased 12%, which the company attributed to reduced wholesale shipments and a decline in DTC.
Dive Insight:
The results come as Kontoor has been implementing Project Jeanius, a strategy meant to generate between $50 million and $100 million in combined profit improvement and savings. The initiative is also meant to optimize its supply chain and reduce operating complexity.
In March, the company named Tom Waldron chief operating officer, overseeing both the Lee and Wrangler bands, as well as supply chain operations. Previously, Kontoor had two COOs, one for each of the core brands.
The company’s U.S. revenue fell 5% to $492 million. International revenue fell 7%, and Europe specifically fell 9%. Asia revenue decreased by 7%, and revenue in the non-U.S. Americas region declined 2%.
“We are pleased with another quarter of market share gains and the improvement we saw in POS and retailer inventories over the course of the first quarter,” Baxter said. “As a result of our strong start to the year and increased visibility into gross margin expansion, we are raising our full year earnings outlook.”
Kontoor continues to expect fiscal 2024 revenue of $2.57 billion to $2.63 billion, a decrease of 1% or increase of 1%. However, it raised its earnings per share outlook to a range of $4.70 to $4.80, up from its prior EPS prediction of $4.65 to $4.75. The company said that the current outlook doesn’t include the impact of the Project Jeanius initiative.
Collaborations were a large part of Kontoor’s strategy in 2023, and in some cases collaborations helped its earnings. Last year, it collaborated with Mattel’s Barbie, Staud and Sandro. It also worked with NFL team the Dallas Cowboys and bourbon brand Buffalo Trace.
