Wrangler parent Kontoor's stock jumps toward a 3-year high after earnings beat
By Tomi Kilgore
Revenue fell for both Wrangler and Lee jeans brands, mostly because of retailers reducing inventory
Shares of Kontoor Brands Inc. jumped toward a three-year high in premarket trading Thursday, after the parent of the Wrangler and Lee jeans brands beat first-quarter profit expectations and boosted its full-year outlook, despite continued inventory cuts by retailers.
The stock (KTB) climbed 4.7% in light trading, putting them on track to open at the highest price seen since June 2021.
The company said net income fell to $59.5 million, or $1.05 a share, from $66.3 million, or $1.16 a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of $1.16 was well above the FactSet consensus of 91 cents. The margin of the EPS beat - about 27% - was the highest percentage since the third-quarter 2020 EPS beat of about 129%, according to FactSet data.
Revenue declined 5.4%, to $631.2 million, but it still beat the FactSet consensus of $607.9 million.
Wrangler revenue fell 3% to $409 million while Lee revenue dropped 9% to $219 million.
"The revenue decline was primarily driven by retailer inventory management actions in the U.S., a decrease in revenue from seasonal product, and lower international revenue, primarily in Europe," the company said.
Gross margin improved by 2.2 percentage points to 45.2%, as lower product costs helped offset lower pricing.
The value of inventory held as of the end of March was $104.2 million, down 6% from the end of December but up 1.4% from a year ago.
Also read: Levi's says baggy jeans are back. That could be trouble for Lululemon's hip-hugging leggings.
For 2024, Kontoor raised its adjusted EPS guidance range to $4.70 to $4.80 from $4.65 to $4.75, but maintained its revenue outlook of $2.57 billion to $2.63 billion.
The stock has slipped 0.5% year to date through Wednesday while the S&P 500 has tacked on 5.2%.
-Tomi Kilgore
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05-02-24 0828ET
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