The decline in revenue was primarily due to the continued impacts of COVID-policy changes in China, which impacted the international wholesale segment. However, the domestic wholesale and direct-to-consumer (DTC) segments showed strength.
US-based company Kontoor Brands has reported a 2 per cent YoY revenue decrease to $667 million in Q1 FY23.
The company’s international revenue in Q1 FY23 was $149 million, a 14 per cent YoY decrease.
However, the domestic wholesale and DTC segments showed strength, with US revenue up 2 per cent and Wrangler brand’s global revenue up 3 per cent.
The US revenue in Q1 FY23 was $518 million, up 2 per cent from the same period last year, with US wholesale revenue increasing 1 per cent, led by digital wholesale, which increased 11 per cent compared to the prior year, the company said in its Q1 FY23 results.
International revenue was $149 million in Q1 FY23, a 14 per cent decrease, or a 9 per cent decrease in constant currency, over the same period last year. The softness in wholesale was somewhat offset by strong DTC performance. The company’s China revenue decreased 36 per cent, or a 31 per cent decrease in constant currency, compared to the first quarter of FY22, driven by impacts in the wholesale channel from COVID-policy changes. Europe revenue also decreased 7 per cent, or a 1 per cent decrease in constant currency, over the same period last year.
The Wrangler brand’s global revenue was $423 million, a 3 per cent increase from the same period last year, while the Lee brand’s global revenue was $241 million, a 9 per cent decrease, or a 7 per cent decrease in constant currency, from the same period in the prior year.
Kontoor Brands’ gross margin decreased 180 basis points to 43 per cent of revenue compared to the same period last year. The selling, general & administrative expenses were $192 million or 28.7 per cent of revenue, in the first quarter, decreasing 20 basis points compared to the same period in the prior year.
Operating income was $95 million in the first quarter, with an operating margin of 14.2 per cent, down 170 basis points compared to the same period in the prior year. EBITDA was $102 million in the first quarter, with an EBITDA margin of 15.3 per cent, down 200 basis points compared to the same period in the prior year.
Earnings per share were $1.16 in the first quarter, compared to $1.40 in Q1 FY22.
“We delivered first quarter results consistent with our expectations and commentary provided on the fourth quarter earnings call. As anticipated, our brands continued to gain share in the US where point of sale outpaced shipments in the quarter. Increases domestically were muted by expected softness in international markets. In addition to share gains and positive sell through, robust performance in our own DTC during the quarter further validates that our brands are connecting with consumers and winning in a challenging marketplace,” said Scott Baxter, president, chief executive officer, and chair of Kontoor Brands.
Fibre2Fashion News Desk (DP)
