Kontoor revamps image of Lee, Wrangler, targets international markets, female clientèle
After revealing the results of the Kontoor group for the second quarter 2019, with revenue down 6% at constant exchange rates to $602 million, CEO Scott Baxter held a Q&A session with financial analysts, assessing the group’s quarterly performance and outlining its future strategies.
The Kontoor group was created last May, when VF Corp. decided to give a separate dimension and a fresh impulse to its three denim brands, Wrangler, Lee and Rock & Republic. Wrangler is ahead of Lee sales-wise, while premium label Rock & Republic is the group’s outsider, and no mention was made of its future course.
Last June, Kontoor notably introduced a new, eco-friendly dyeing process called Indigood at its various production sites. Indigood doesn’t use water and cuts energy consumption and waste creation by 60% for each production lot, allowing the group to save up to 5.5 billion litres of water by 2020.
Kontoor has also restructured its organisation. Lee’s offices have been moved from Kansas to the Wrangler headquarters in South Carolina. Lee’s Canadian subsidiary has closed, while the brand’s commercial divisions in the USA and Asia have been reorganised.
Womenswear is now one of the group’s development segments, and the launch of the Body Optix range in Spring/Summer 2018 has been deemed satisfactory. Since then, the brand sold 500 million units and, among others, it performed very well in China with premium retailers. China is indeed listed among the international markets the group is keen to expand in, and also launch in, since Wrangler isn't currently available in the country.
Kontoor is planning to increase the number of collaborations with designers and artists in order to boost its brands’ visibility. Also, Lee and Wrangler will soon revamp their image with new advertising campaigns. In the meantime, Wrangler built on the success of the second version of the track by Lil Nas X, ‘Old Town Road’, featuring country singer Billy Ray Cyrus and a new clip. The track was a hit in the USA, notably topping Billboard’s charts for 16 consecutive weeks. The video contains an understated but effective product placement by Wrangler.
Kontoor suffered setbacks in various international markets. It therefore decided to leave Turkey and to stop selling its collections directly in Chile, Russia and Israel, choosing instead to collaborate with local distributors. The majority, 80%, of the group’s sales are currently generated in the USA, with the remaining 20% coming from overseas markets. The group is aiming for a more "appealing," "fashion" positioning on its domestic market, and to redeploy elsewhere, especially in Europe and Asia.
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