Digital strength drives revenue growth at Kontoor Brands
Kontoor Brands, Inc., the owner of the Lee and Wrangler labels, announced third-quarter revenue of $652.3 million on Thursday, an increase of 12% compared to $583.2 million in the same period in the previous year. In constant currencies growth was 11%.
According to the Greensboro, North Carolina-based denim specialist, its progress in the third quarter ended October 2, 2021, was primarily driven by growth in its digital business, both in its own e-commerce channels and in digital wholesale.
This was somewhat offset by the impact of the company’s closure of its VF Outlet stores, as well as the discontinuation of the sale of third-party branded merchandise in all of the group’s stores. When compared to Q3 2019, the most recent third quarter prior to the impact of the Covid-19 crisis, Kontoor’s revenue growth was 2%, or 11% excluding the impact of these strategic actions.
The company’s quarterly revenues in the U.S. were $492.8 million, up 8% from $455.5 million in the prior-year period. Its company-owned digital business in the region posted a 52% rise in revenues, while digital wholesale experienced 90% growth. Compared to the third quarter of 2019, Kontoor’s owned digital sales rose 118%, while digital wholesale revenues increased 237%.
International revenue totaled $159.5 million, an increase of 25% compared to $127.8 million in the prior-year period. In China, the company saw revenue growth of 22%, while in Europe its sales increased 19%.
Broken down by brand, revenues rose 22% year over year to $421.5 million at Wrangler, with the brand’s U.S. operations posting a 20% increase. Revenues at Lee totaled $228.0 million, up 6% compared to the prior-year period.
Kontoor’s net earnings for the third quarter were $63.4 million, or $1.07 per diluted share, compared to $60.8 million, or $1.05 per diluted share, in the same period in the previous year.
“Kontoor is uniquely positioned to win in the marketplace, as evidenced by another quarter of broad-based strength across segments, channels and regions,” commented Kontoor Brands president and CEO Scott Baxter in a release.
Year to date, Kontoor reported net earnings of $151.5 million, or $2.56 per diluted share, on revenues of $1.8 billion. This compares to earnings of $24.8 million, or $0.43 per diluted share, on revenues of $1.4 billion, in the same nine-month period in 2020.
In line with its progress in the third quarter, Kontoor announced that it has increased its financial guidance for the full fiscal year. The company now expects its annual revenues to see a year-over-year percentage gain in the high-teens, totaling between $2.47 billion and $2.48 billion.
“We expect our momentum to continue building, as reflected in our raised fiscal year guidance,” added Baxter. “Our strategic investments in key TSR-bolstering enablers such as digital, demand creation and people should fuel our accelerating fundamentals,” he concluded.
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