Why Wrangler And Lee Owner Kontoor Brands Shares Are Diving Today

Kontoor Brands, Inc. KTB shares are trading lower in the morning session on Wednesday.

The company reported fourth-quarter revenues of $669.80 million, missing the analyst consensus of $726.905 million. Revenues fell 8%.

Revenue decreases were primarily driven by retailer inventory management actions in the U.S., partially offset by gains in digital wholesale, China and DTC.

Kontoor reported adjusted earnings per share of $1.35, missing the analyst consensus of $1.37.

The gross margin increased by 90 basis points to 41.7% on a reported basis and increased by 140 basis points to 42.2% on an adjusted basis compared to the prior year. 

On an adjusted basis, SG&A declined 5% to $202 million, or 30.1% of revenue, compared to the prior year.

The company ended fiscal 2023 with $215 million in cash and cash equivalents and approximately $0.8 billion in long-term debt.

Inventory at the end of fiscal 2023 was $500 million, down 16% compared to the prior year and in line with expectations.

To meet the accelerated growth objectives while maintaining a strong financial profile, Kontoor Brands has commenced Project Jeanius to support increased investment and drive higher returns on capital.

“This is one of the most important steps we have taken as a public company and will transform our organization from the legacy structure required at the spin to a best-in-class global multi-brand platform,” said Scott Baxter, President, Chief Executive Officer and Chair of Kontoor Brands.

Dividend: As previously announced, the company’s board of directors declared a regular quarterly cash dividend of $0.50 per share, payable on March 18, 2024.

Outlook: The company sees FY24 revenue of $2.57 billion – $2.63 billion versus $2.72 billion estimate. The company sees adjusted EPS of $4.65 – $4.75 versus the $5.11 estimate.

For the first quarter, the company expects adjusted EPS of approximately $0.90 versus the $1.31 estimate. The company expects a revenue decline of approximately 9%, reflecting tight retailer inventory management and a conservative approach to seasonal products, with a gross margin of 44% to 44.2%.

Price Action: KTB shares are trading lower by 9.65% to $57.33 on the last check Wednesday.

Photo via Wikimedia Commons