Wrangler and Lee parent Kontoor Brands ended last year with a 9 per cent improvement in sales and predicts a similar result this year without including the performance of newly-acquired outerwear brand Helly Hansen.
Revenue of US$2.61 billion was consistent with the prior year, with adjusted operating income of $381 million, up 9 per cent on 2023 on an adjusted basis. For the new year, Kontoor predicts an adjusted operating income of $400 million to $408 million, representing an increase of 5 to 7 per cent, on sales of $2.63 billion to $2.69 billion.
The full-year result followed a more modest 5 per cent improvement in sales in the final quarter, on a constant currency basis, which delivered an adjusted $101 million operating income, a 17 per cent year-on-year improvement.
Among the year’s achievements was a 22 per cent reduction in inventory.
“Our better-than-expected fourth quarter was driven by stronger revenue, earnings, and cash generation,” said Scott Baxter, president, CEO and chairman. “This was a landmark year for Kontoor driven by continued market share gains, accelerating business fundamentals, increasing capital allocation optionality, and strong returns for our shareholders.
“We enter 2025 from a position of strength, and I am confident we are well positioned to deliver another year of strong value creation.”
For the full 2024 year, Kontoor saw revenue from the US grow by 1 per cent year on year to $2.09 billion, offset by a 5 per cent decline in international sales to $521 million. Direct digital revenue grew by 8 per cent in the US and 15 per cent in international markets.
By brand, Wrangler sales rose 3 per cent to $1.81 billion, while Lee slipped 6 per cent to $791 million globally.
The company reported an increase in gross margin of 260 basis points to 45.1 per cent on an adjusted basis, attributed to lower product costs, a change in the direct-to-consumer mix, and improved supply chain efficiencies, partially offset by lower pricing.
Looking forward, Baxter said the acquisition of Helly Hansen – expected to be closed in the second quarter – will provide an opportunity for even stronger value creation moving forward.
“Our outlook reflects continued revenue growth, market share gains, gross margin expansion, strong operating earnings and cash generation.”
He said the scaling benefits of the company’s restructuring program Project Jeanius will support increased investment in its brands and platforms and further enhance return on invested capital.
“We are mindful of the uncertain environment and will continue to manage the business conservatively, but we are confident in our ability to drive strong shareholder returns in 2025 and beyond,” Baxter concluded.
