For the third quarter (Q3) ended 30 September 2023, Kontoor Brands reported a total revenue increase of 8% (7% increase on constant currency basis) to $655m from $607m compared to the same period in the prior year.
This increase in revenue was primarily driven by strength in US wholesale and direct-to-consumer (DTC), partially offset by decreases in International, mainly China.
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Operating income was $85.48m in the third quarter, which is a 14% change from last year’s $75.07m. While the net income increased 17% from $51.08m to $59.53m in the third quarter.
Kontoor Brands key Q3 results
- Revenue increased 8% (7% in constant currency) to $655m compared to the same period last year
- Operating income was $85m and included an approximate $13m duty charge.
- net income was up 17% at $59.5m compared to $51m in the same period last year.
Scott Baxter, president and chief executive officer and chair of Kontoor Brands shares that in the third quarter Kontoor delivered strong revenue growth and profitability that was ahead of expectations, excluding the duty charge, which he says reflects the broad-based strength of the business.
Baxter continues: “While we continue to anticipate a challenging macroenvironment, we expect our investments in innovation and demand creation to further cement competitive separation in the marketplace and fuel the continued momentum of our brands. We are prudently managing our inventory and are focused on reducing inventory levels further as we establish an even stronger foundation for next year.”
In addition to this, the company points out that as it previously announced, the company’s board of directors declared a regular quarterly cash dividend of $0.50 per share, payable on 18 December 18 2023, to shareholders of record at the close of business on 8 December 2023.
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By GlobalDataKontoor Brands updates financial outlook
Kontoor Brands says it remains confident in its strategy and expects to continue investing in its brands and capabilities in support of accretive growth and anticipates accelerating cash generation as inventory continues to normalise in 2023.
Revenue is now expected to increase approximately 1% compared to 2022, which compares to the prior outlook of a low-single digit percentage increase.
During Q4 the company expects ongoing market share gains and strength from DTC to be offset by more challenging macroeconomic and consumer demand conditions in the US, with the China market more fully reopening.
Adjusted gross margin is expected to be 42.5% compared to the prior outlook of 43.5% to 44.0%.
Last month (October), Kontoor Brands surpassed its 2025 water savings target two years early.
Kontoor Brands attributed its water saving achievement to its Indigood Program, a global initiative initially centred around foam-dyeing technology to reduce freshwater consumption in the dyeing process by 90% compared to conventional indigo dyeing methods.
