Kontoor Brands says denim isn’t going out of style.
It’s the message the North Carolina-based parent of the Wrangler and Lee brands sought to project in its first quarter 2021 earnings, where it reported revenues of $652 million. That represents a 29 percent increase from the same time last year, when the COVID-19 pandemic began to spread, resulting in some temporary lockdowns in early attempts to curb the spread of the virus.
The company’s net income in the three months ended April 3 was $65 million, up from a $2.7 million loss the same time last year. The company’s adjusted earnings per share were $1.43.
In light of its progress, Kontoor also revised its guidance for 2021, saying it expects adjusted earnings per share to fall between $3.70 and $3.80 and also projects a higher gross margin. The company expects to spend roughly up to $50 million in capital expenditures and anticipates a 22 percent effective tax rate, according to a statement.
But it conceded the ongoing pandemic continues to pose uncertainties and that it has still “continued to negatively impact the company’s first quarter 2021 results in select markets and channels.”
“We continue to execute the strategic playbook we’ve communicated, as structural margin gains support focused investments in demand creation, infrastructure and technologies,” said Kontoor Brands chief executive officer Scott Baxter, in a statement. “As we transition into our next horizon, the stage is set for us to pivot to growth.”
The company attributed its growth to improvements in its web site and digital wholesale revenues, and increases in the revenues of both its Wrangler and Lee brands. Wrangler’s revenues overall rose 31 percent to $399 million this quarter, while the Lee brand’s revenue rose 37 percent to $250 million, the company said.
The closing of a number of VF outlet stores last year as part of certain restructuring efforts led to drops in other global revenues, the company said.
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