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Sep 30, 2023
Kontoor Brands Q3 2023 Earnings Report
Kontoor Brands reported strong revenue growth and profitability, driven by U.S. wholesale and DTC strength, but gross margin was impacted by duty expense and inventory management actions.
Key Takeaways
Kontoor Brands reported an 8% increase in revenue to $655 million for Q3 2023. EPS was $1.05, including a $0.17 charge from duty expense. Excluding the duty charge, EPS was $1.22, a 10% increase compared to the prior year. The company is updating its full year outlook to reflect these results and anticipated challenges.
Q3 2023 revenue increased 8% (7% in constant currency) compared to Q3 2022.
Q3 2023 EPS was $1.05, including an unanticipated $0.17 charge from duty expense related to prior periods.
Inventory decreased 11% compared to Q3 2022.
FY 2023 revenue is now expected to increase approximately 1% compared to FY 2022.
Kontoor Brands
Kontoor Brands
Kontoor Brands Revenue by Segment
Kontoor Brands Revenue by Geographic Location
Revenue by Segment
Wrangler Revenue
CapyFin.comLee Revenue
CapyFin.comRevenue by Geographic Location
U.S. Revenue
CapyFin.comInternational Revenue
CapyFin.com Forward Guidance
Kontoor Brands is updating its 2023 outlook, expecting revenue to increase approximately 1% compared to 2022. Adjusted gross margin is expected to approximate 42.5%, and adjusted EPS is expected to approximate $4.35.
Positive Outlook
- Ongoing market share gains
- Strength from DTC
- Approximately 300 basis points of gross margin expansion in Q4 2023
- Geographic and DTC mix as well as lower input costs to drive significant gross margin expansion in 2024
- Accelerated earnings growth and continued normalization of inventory to result in increased cash generation in 2024
Challenges Ahead
- Challenging macroeconomic and consumer demand conditions in the U.S.
- China market more fully reopening.
- Adjusted gross margin is expected to approximate 42.5 percent compared to the prior outlook of 43.5 percent to 44.0 percent.
- Adjusted SG&A is now expected to increase at a low-single digit percentage compared to adjusted SG&A in 2022, which compares to a mid-single digit increase in the prior outlook.
- Adjusted EPS is now expected to approximate $4.35, including an unanticipated $0.15 charge for duty expense related to prior periods.
Revenue & Expenses
Visualization of income flow from segment revenue to net income