Wrangler, Lee Parent's Q1 Earnings Exceed Street View; Cuts Q2 EPS Outlook

Kontoor Brands Inc KTB reported first-quarter FY22 sales growth of 4% year-on-year to $679.74 million, beating the consensus of $655.33 million.
The company attributed the revenue growth to strength in Digital and continued positive trends in the U.S. wholesale business and solid performance in international markets.
Revenue in the U.S. increased 4% Y/Y, and International revenue rose 6%.
Global revenue from the Wrangler brand increased 3% Y/Y, and the Lee brand grew 6%.
Adjusted EPS of $1.43 beat the consensus of $1.22.
Gross profit margin for the quarter contracted 130 basis points Y/Y to 44.8%. Operating margin increased 160 basis points to 15.9%, and operating income for the quarter rose 16% to $108 million.
Kontoor Brands held $193.6 million in cash and equivalents as of March 2022. Cash provided by operating activities for the quarter totaled $74.8 million.
EBITDA of $117.8 million increased 15.8% Y/Y.
“We expect macroeconomic challenges will persist, with inflationary pressures, supply chain disruptions, and COVID lockdowns weighing on the operating environment,” said CEO Scott Baxter.
Outlook: Kontoor Brands sees FY22 sales of above $2.7 billion, up 10% Y/Y (prior guidance of increasing high single digits) versus the consensus of $2.64 billion.
The company raised FY22 EPS guidance to $4.75 - $4.85 from $4.65 - $4.75, above the consensus of $4.52.
It sees Q2 EPS of $1.05 - $1.15 (prior guidance $1.25 - $1.35) due to COVID lockdowns in China and higher transitory freight expenses negatively impacting gross margin and profitability.
The company's Q2 revenue outlook is unchanged at $640 million - $650 million, increasing 30-32% Y/Y.
Price Action: KTB shares are trading lower by 1.29% at $40.62 on the last check Thursday.
Photo Via Wikimedia Commons

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