Wrangler, Lee Parent Posts Mixed Q2 Earnings

Kontoor Brands Inc KTB reported second-quarter FY22 sales growth of 25.1% year-on-year to $614 million, missing the consensus of $618.20 million.
The company attributed the sales growth to the strength in the U.S., in both the Digital and wholesale channels.
Revenue in the U.S. increased 40% Y/Y, and International revenue fell 18%.
Global revenue from the Wrangler brand increased 34% Y/Y, and the Lee brand grew 10%.
EPS of $1.09 beat the consensus of $1.00.
The gross profit margin for the quarter contracted 260 basis points Y/Y to 43.5%. The operating margin expanded 730 basis points to 14.5%, and operating income for the quarter rose 152% to $88.7 million.
Kontoor Brands held $145.3 million in cash and equivalents as of July 2, 2022. Cash provided by operating activities for the six months totaled $99.4 million.
Inventories as of June 2022 climbed 33% Y/Y to $537.9 million.
"In a highly dynamic macroeconomic environment, supply chain challenges and inflationary pressures accelerated during the quarter," said Chair & CEO Scott Baxter.
Outlook: Kontoor Brands expects FY22 revenue to increase 6% (prior guidance 10%).
The company lowered FY22 adjusted EPS guidance to $4.40 - $4.50 from $4.75 - $4.85, above the consensus of $4.23.
"Looking forward, we anticipate that macro conditions will remain challenging, particularly as retailer inventories are rebalanced and inflation weighs on overall consumer demand," added Baxter.
Price Action: KTB shares are trading higher by 2.63% at $38.85 on the last check Thursday.
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