Kontoor Brands, Inc. a global lifestyle apparel company, with a portfolio led by two of the world’s most iconic consumer brands, Wrangler® and Lee®, recently published Outlook 2022. The Company is raising its 2022 Outlook. While the impacts of the COVID-19 pandemic and other macroeconomic factors remain uncertain, the Company is updating its 2022 guidance.
Scott Baxter, President, Chief Executive Officer, and Chair of Kontoor Brands said, “The continued emphasis on our digital ecosystem, demand creation platforms, and talent will increasingly support Kontoor in becoming a consumer-centric, growth-oriented company. These investments, when combined with our significant cash flow optionality, should afford compelling returns for all KTB stakeholders.”
Outlook 2022
- Revenue is now expected to be above $2.7 billion, increasing at approximately 10 percent compared to 2021, and compared to prior guidance of a high single-digit percentage. The Company now expects first-half revenues to increase in the mid-teens range compared to the prior year, versus a low-teens range in the prior guidance. Consistent with prior guidance, Q2’22 revenue is expected to be in the range of $640 million to $650 million, increasing 30 to 32 percent compared to last year.
- The gross margin is expected to be consistent with the adjusted gross margin of 44.6 percent achieved in 2021. The Company expects higher inflationary pressures on input costs, transitory expenses, including freight, and adverse mix due to COVID lockdowns in China to weigh on gross margin. However, the benefits from continued structural mix shifts to accretive channels such as Digital, ongoing cost-saving initiatives, and strategic pricing are anticipated to offset these higher costs. The Company expects the impacts of COVID lockdowns in China to weigh most heavily on the Q2’22 gross margin.
- SG&A investments will continue to be made in the Company’s brands and capabilities. In addition to incremental volume-related items, SG&A investments are expected to be amplified in demand creation, Digital, and international expansion. Compared to adjusted SG&A in 2021, the Company expects full-year SG&A growth to be relatively consistent with full-year revenue growth, with second-half investments anticipated to be stronger than in the first half.
- EPS is now expected to be in the range of $4.75 to $4.85, increasing 11 percent to 13 percent over 2021 adjusted EPS, and up from the prior guidance of $4.65 to $4.75. Q2’22 EPS is now expected to be in the range of $1.05 to $1.15, compared to prior guidance of $1.25 to $1.35, due to COVID lockdowns in China and higher transitory freight expenses negatively impacting gross margin and profitability. Q2’21 adjusted EPS was $0.70.
- Capital Expenditures are expected to be in the range of $35 million to $40 million, primarily to support manufacturing, distribution, and information technology projects.
Details of Outlook 2022 is available on the brand’s website.
