Kontoor Brands sees sales and earnings improve in Q4
Greensboro, North Carolina-based denim group Kontoor Brands, Inc. announced both top and bottom-line growth in the fourth quarter ended December 2020 on Tuesday, with progress driven by a solid digital performance and strong Wrangler sales in the United States.
The company’s Q4 revenue totaled $660.9 million, increasing 1% from $652.6 million in the same period in the previous year. In constant currencies sales were flat year over year.
Both Kontoor’s owned e-commerce and digital wholesale channels contributed to the gains, which were partially offset by the impact of the Covid-19 pandemic on the company’s operations.
The group’s U.S. revenue for the quarter was $520 million, up 1% from the prior-year period. The Wrangler brand’s revenues increased 8% on the market, thanks largely to a strong wholesale performance, while the company’s national owned e-commerce and digital wholesale channels saw rises of 50% and 75%, respectively.
International revenue for the quarter rose 4% to $141 million, with Wrangler’s international sales increasing 5% and Lee’s growing 3%. Both the Europe and China businesses posted sequential sales improvements, seeing rises of 11% and 7%, respectively.
Global Wrangler revenue increased 7% year over year to $448 million, while Lee achieved a 1% rise in its sales, which totaled $204 million. Other global revenue fell 75% to $9 million, reflecting the company’s exit from 38 VF Outlet stores in the quarter, as well as its decision to reduce the sale of goods manufactured for third parties and the Rock & Republic brand.
Kontoor’s total net income for the quarter was $43.1 million, up 50% from $28.8 million in the prior-year period. Earnings per share was $0.74, compared to $0.50.
In a release, Kontoor president and CEO Scott Baxter said that the company’s Q4 results were “a result of the strategic measures we’ve taken over the last two years, allowing us to not only navigate near-term challenges, but also position the company for success in 2021 and beyond.”
“Focused investments in brand-enhancing initiatives, technology and talent are setting the stage for an exciting next phase of our journey in which we expect accelerating long-term sustainable growth,” he added.
In 2020, Kontoor’s annual revenues fell 18% to $2.1 billion, compared to $2.5 billion in 2019. According to the company, the decline was primarily caused by temporary store closures and stay-at-home orders related to the Covid-19 pandemic.
Full-year revenues decreased 14% to $1.64 billion in the U.S. and 29% on the company’s international markets, where sales totaled $456 million.
The group’s annual net income came to $67.9 million, down 30% from $96.7 million in 2019. Earnings per share was $1.17, decreasing from $1.69.
Looking forward, Kontoor expects to report a year-over-year increase in the low-double-digit range in its annual revenue in 2021. This prevision takes into account the negative impact of the company’s VF Outlet exits, as well as that of its actions in India, where the group recently transitioned to a new licensed business model.
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