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®, has recently published its financial results for its second quarter.
“Kontoor’s strong second-quarter results, which came in above our expectations, and our improving fundamentals give us the confidence to raise full-year guidance. As discussed at our recent Investor Day, we expect to catalyze sustained, profitable growth across channels, categories, and geographies, fueled by investments in key enablers within talent, demand creation, digital and sustainability,” said Scott Baxter, President, and Chief Executive Officer, Kontoor Brands.
Financial Report–
- Revenue increased to $491 million, a 41 percent increase on a reported basis and 37 percent in constant currency over the same period in the prior year.
- Gross margin increased 760 basis points to 46.1 percent of revenue, compared to the same period in the prior year. Favorable channel, customer, and product mix were the primary drivers of gross margin gains in the quarter. In addition, the current period benefited from COVID-19 impacts associated with downtime in owned manufacturing in 2020, as well as lower distressed sales. Compared to the second quarter of 2019, the gross margin increased by 750 basis points.
- Selling, General & Administrative (SG&A) expenses were $191 million on a reported basis. Adjusted SG&A was $168 million, or 34.1 percent of revenue, down 270 basis points compared to the same period in the prior year. Adjustments primarily relate to costs associated with the global ERP implementation and information technology infrastructure build-out. Higher demand creation and digital investments in support of 2021 and future revenue offset, in part, better-fixed cost leverage on improving revenues and restructuring benefits.
- Operating income on a reported basis was $35 million. Adjusted operating income was $59 million, increasing 957 percent compared to the same period in the prior year. Adjusted operating margin increased 1,040 basis points to 12.0 percent of revenue, reflecting the benefits of gross margin improvements and fixed cost leverage on better revenues.
- Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) on a reported basis were $44 million. Adjusted EBITDA was $67 million, increasing 433 percent compared to the same period in the prior year. Adjusted EBITDA margin increased 1,010 basis points to 13.7 percent of revenue.
- Earnings per share were $0.40 on a reported basis compared to a loss per share of ($0.58) in the same period in the prior year. Adjusted earnings per share were $0.70 compared to a loss of ($0.22) in the same period in the prior year.
