American firm Kontoor Brands' revenue at $607 mn in Q2 FY24

Kontoor Brands, a US-based global lifestyle apparel company behind brands such as Wrangler and Lee, has reported a revenue of $607 million in the second quarter of fiscal 2024 (Q2 FY24), reflecting a 1 per cent decrease compared to the prior year.

Despite the revenue dip, Kontoor Brands reported an increase in gross margin, which rose by 410 basis points to 44.7 per cent on a reported basis, and by 420 basis points to 45.2 per cent on an adjusted basis compared to the prior year. The company’s selling, general & administrative expenses were $196 million, or 32.3 per cent of revenue on a reported basis.

Operating income for the quarter was $75 million on a reported basis. On an adjusted basis, operating income increased by 10 per cent to $80 million, with an adjusted operating margin of 13.1 per cent, up by 140 basis points compared to the prior year. Earnings per share (EPS) were reported at $0.92, while adjusted EPS rose to $0.98, representing a 27 per cent increase from the prior year's adjusted EPS of $0.77, the company said in a press release.

Breaking down the revenue by region, US revenue was $496 million, marking a 1 per cent decrease compared to the previous year. International revenue stood at $111 million, a 6 per cent decline (5 per cent decrease in constant currency) year-over-year. In Europe, revenue decreased by 5 per cent, with a 3 per cent growth in direct-to-consumer sales (4 per cent growth in constant currency) offset by an 8 per cent decline in wholesale. In Asia, revenue fell by 13 per cent (10 per cent decrease in constant currency), driven by a 26 per cent decrease in wholesale (24 per cent decrease in constant currency) partially offset by a 4 per cent increase in direct-to-consumer sales (8 per cent increase in constant currency).

The non-US Americas region saw a 2 per cent increase in revenue (3 per cent increase in constant currency), primarily due to growth in wholesale. International direct-to-consumer sales increased by 3 per cent (5 per cent increase in constant currency), with a 25 per cent growth in digital sales (28 per cent growth in constant currency) partially offset by an 11 per cent decline in owned brick-and-mortar stores (9 per cent decrease in constant currency).

In terms of brand performance, Wrangler's global revenue increased by 1 per cent to $429 million compared to the prior year. In contrast, Lee's global revenue saw a 7 per cent decrease (6 per cent decrease in constant currency) to $175 million compared to the prior year.

“We delivered second quarter results that exceeded our expectations driven by higher revenue, stronger gross margin expansion and cash flow generation,” said Scott Baxter, president, chief executive officer and chair of Kontoor Brands. “Our fundamentals continue to improve, providing us with significant optionality to drive long-term value while returning more than $100 million to shareholders year-to-date. We are carrying great momentum into the second half of the year and are raising our outlook, including the impact of additional demand creation investments that will support profitable growth for the balance of the year and beyond.”

Fibre2Fashion News Desk (DP)