Kontoor Brands (KTB) Surpasses Q1 Earnings Expectations, Raises FY2024 Financial Outlook

• Kontoor Brands, Inc. reports Q1 2024 results, beating Zacks Consensus Estimate for both top and bottom lines.
• Despite a year-over-year revenue decline, earnings remain consistent with the previous year.
• The company’s shares rose 8.4% on May 2, 2024, following an impressive 16.9% rise over the past three months.

Kontoor Brands, Inc. outperforms expectations in Q1 2024, prompting an increase in earnings guidance despite a slight decline in revenues. The company’s shares continue to rise, outperforming industry trends.

Q1 2024 Details

Kontoor Brands, a global lifestyle apparel company, reported adjusted earnings of $1.16 per share, significantly surpassing the Zacks Consensus Estimate of 90 cents. GAAP earnings were $1.05, slightly down from $1.16 in the year-ago period. Net revenues of $631.2 million, although decreased by 5% from the prior-year quarter, surpassed the Zacks Consensus Estimate of $609.2 million. The decline in revenues primarily stemmed from U.S. retailer inventory management actions, lower revenues from seasonal products, and a decrease in international revenues, particularly in Europe.

Segmental Details

U.S. revenues of $492 million experienced a decline of 5% year over year, with U.S. wholesale revenues decreasing by 6%. International revenues of $139.2 million fell 7% on a year-over-year basis. Brand-wise, Wrangler’s global revenues declined 3%, while Lee brand’s global revenues tumbled 9% year over year.

Financial Aspects and Outlook

The company ended Q1 2024 with cash and cash equivalents of $215.1 million, long-term debt of $759.2 million, and stockholders’ equity of $387.2 million. Kontoor Brands updated its guidance for 2024, forecasting revenues in the range of $2.57-$2.63 billion, suggesting a 1% decline to 1% increase from the year-ago period. Adjusted gross margin is anticipated to be 44.6%, implying an expansion of 210 bps from the prior year. Adjusted earnings per share are expected to be in the range of $4.70-$4.80.

Conclusion

Despite a slight decline in revenues, Kontoor Brands, Inc. delivered a strong performance in Q1 2024, beating estimates and prompting an increase in earnings guidance. The company’s shares continue to rise, reflecting investor confidence in the company’s financial health and future prospects.