Kontoor Brands Q4 sales hit by U.S. inventory management, China a bright spot

Kontoor Brands on Wednesday reported a 8 percent decline in fourth-quarter sales to $670 million, with sales hindered by retailer inventory management actions in the U.S., which offset gains in digital wholesale, China and direct-to-consumer.

The American firm said U.S. revenue was $538 million, down 11 percent compared to the prior year, hit by a 12 percent slide in U.S. wholesale. Growth in digital wholesale and owned brick-and-mortar smore than offset by reduced wholesale shipments as retailers tightly managed inventory levels.

International revenue increased 4 percent to $132 million, a 4 percent increase, with growth in both DTC and wholesale.

China increased 23 percent, driven by gains in DTC and wholesale, while Europe decreased 3 percent hit by a decline in wholesale.

Wrangler brand global revenue was $461 million, a 9 percent decrease, while Lee revenue fell 6 percent, to $206 million.

For the full-year ending December 31, revenue fell 1 percent to $2.61 billion, said the Greensboro, North Carolina-based company.

​“Our POS performance in the U.S. outpaced shipments in the fourth quarter and resulted in continued market share gains. However, the U.S. wholesale environment was challenging as retailers managed inventory levels tightly against uncertain consumer spending patterns, which negatively impacted our revenue,” said Scott Baxter, president, chief executive officer and chair of Kontoor Brands.

“We are pleased with our execution and the progress we made further reducing inventory levels, accelerating cash generation, and driving strong gross margin expansion and returns on capital.”

Looking ahead, the company expects 2024 revenue to be in the range of $2.57 billion to $2.63 billion, reflecting a decrease of 1 percent to an increase of 1 percent compared to the prior year. 

Coinciding with the earnings update, Kontoor announced the appointment of Mary Campbell to its board of directors, effective immediately. Additionally, the company announced an increase in the size of the board from seven to eight directors.

Campbell is a senior executive with extensive knowledge in consumer driven product innovation, marketing and brand building, and traditional and new media platforms, as well as leading teams for long term growth and evolution.