Kontoor Brands raises FY outlook as Q1 profits widen

Kontoor Brands, the owner of denim labels Wrangler and Lee, has raised its outlook for fiscal year 2022 after reporting an increase in revenue and profit in the first quarter.

In the three months to April 2, the company made a net income of 80.8 million dollars compared to 64.5 million dollars a year earlier.

Its revenue for the quarter came in at 680 million dollars, up 4 percent from a year earlier on a reported basis.

Revenue in Kontoor Brands’ home market of the US increased 4 percent to 507 million dollars, while international revenue was up 6 percent to 173 million dollars.

Breaking it down by brand, global revenue at Wrangler increased 3 percent to 412 million dollars, while global revenue at Lee was up 6 percent to 264 million dollars. ‘Other’ global revenue increased 11 percent to 3 million dollars.

Supply chain challenges

“Our strategies continue to yield accelerating performance, with first quarter results coming in above our expectations,” Kontoor Brands chair and CEO Scott Baxter told investors.

But he said the company expects inflationary pressures, supply chain disruptions and Covid lockdowns to weigh on the business.

“However, based on Kontoor-specific drivers, momentum across the business and continued execution of our strategic playbook, we have confidence in raising our fiscal year revenue and EPS guidance,” he said.

Kontoor Brands now expects full-year revenue to be above 2.7 billion dollars, representing year-over-year growth of approximately 10 percent. For the first half, it forecasts revenue to increase in the mid-teens range, versus a low-teens range in its prior guidance.

The company expects full-year gross margin to be consistent with the adjusted gross margin of 44.6 percent achieved in 2021.