Kontoor Brands Inc. (KTB, Financial) released its second-quarter results before the market opened on Aug. 6. The denim company that owns the Wrangler and Lee brands posted earnings and revenue beats.
By the numbers
The company posted a second-quarter adjusted loss per share of 22 cents compared to earnings per share of 96 cents in the year-ago period. Analysts had forecasted a loss per share of 40 cents. Revenue declined 43% year-over-year to $349 million but exceeded analysts’ expectations of $292 million. The pandemic-related store closures adversely impacted revenue.
Reflecting on the company's performance, President and CEO Scott Baxter said:
“During the second quarter, we successfully balanced managing through short-term challenges while taking proactive measures to drive competitive separation in the global marketplace. We strengthened our liquidity position, improved our financial flexibility and paid down debt, all while investing in growth and new business development opportunities.”
On the global front, Wrangler recorded revenue of $252 million, which reflected a decline of 31% from the same period last year. Revenue slipped 27% in the U.S., driven by both the pandemic and planned removal or reduction of non-core programs. Wrangler’s profit plunged 49% $28.9 million. This was less than the $57 million reported in the year-ago quarter.
The Lee brand, which is densely distributed in China, saw revenue decline from $206.9 million in the previous year to $86 million. Segment loss amounted to $18.4 million, down 234% on a year-over-year basis.
As a precautionary measure against the coronavirus, Kontoor shut down all company-owned and operated stores in North America and Europe. This included Lee wrangler outlets, Lee Wrangler Clearance Centers and Wrangler Hometown studio stores. In China, however, the company has resumed operations with all the owned and partnered physical stores reopened.
Kontoor exited the quarter with $256 million in cash and cash equivalents and long-term debt of roughly $1.1 billion.
Guidance
Kontoor Brands did not provide 2020 guidance.
Disclosure: I do not hold any positions in the stocks mentioned.
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