Ahead of management’s attendance at the UBS consumer conference, Kontoor Brands reaffirms 2022 outlook and provides details on quarterly outlook for the first half of 2022 and European business
GREENSBORO, NC–(BUSINESS WIRE)–Kontoor Brands, Inc. (NYSE: KTB), a global lifestyle apparel company with a portfolio led by two of the world’s most recognized consumer brands, wrangler® and lee®before attending the UBS Consumer Conference, tomorrow, March 9thth, 2022, has reiterated its outlook for 2022 and provided more detailed information on its quarterly outlook for the first half of 2022. In addition, given recent events in Europe, the company has provided context on its business in the region.
Details on quarterly outlook H1’22
Two years ago, the company began implementing its new, global ERP system, which has now been successfully completed. As previously noted, the conversion and transition of the Company’s North American ERP system resulted in the timing of shipments benefiting Q1 2021 while negatively impacting Q2 2021.
As a reminder, and per the Company’s comments on its Q4 2021 earnings call, 2021 was impacted by a variety of factors, including the aforementioned ERP time shifts, as well as temporary COVID shutdowns and supply chain disruptions that are increasing from quarter to quarter volatility. These factors will impact year-over-year growth rates on a quarterly basis, but are not expected to impact the full year. The Company expects dollar-denominated earnings to reflect normalization of seasonality in 2022, more consistent with its 2019 quarterly cadence.
Therefore, the company provides additional details on its outlook for the first half of 2022:
- H1’22 revenue is expected to rise in the low teens yoy, consistent with previous forecasts
- Q1’22 revenue is expected to be in the range of $650 million to $660 million or flat to low single digits compared to last year
- Q1’22 GAAP EPS is expected to be in the $1.15 to $1.25 range
- Q2’22 revenue expected to be in the range of $640 to $650 million or up 30 to 32 percent year-on-year;
- Q2’22 GAAP earnings per share is expected to be in the $1.25-$1.35 range
Commentary on the European business
In light of recent events in the European region, the company has provided the following context:
The Company does not conduct any direct or proprietary business in Russia or Ukraine;
A small number of third party suppliers and licensees operate in these countries; this transaction is not essential to Kontoor’s European revenues and to Kontoor de minimis’ overall revenues;
Although the company does not disclose regional revenues in Europe, its international business accounts for approximately 25 percent of Kontoor’s total revenues; China represents about 8 percent of Kontoor’s total sales; the company also operates in Canada, Latin America and other Asian countries;
The company’s revenues in Europe are concentrated in developed markets such as France, Germany, Italy, Poland, Scandinavia, Spain and the United Kingdom;
The Company will continue to closely monitor developments in the region to ensure we comply with evolving legal and regulatory frameworks;
In support of ongoing humanitarian efforts, the company will make a charitable donation through a global philanthropic organization. Kontoor employees have also joined forces in Europe to donate clothing samples to ongoing relief efforts related to Ukraine.
“As a global company, we work across borders every day. We take great pride in creating connections and strengthening communities. Caring for one another is at the core of our destiny. On behalf of Kontoor, we condemn the recent unspeakable acts of violence against the people of Ukraine,” said Scott Baxter, President, CEO and Chairman of the Board.
“We do not own or operate any direct business in Russia or Ukraine. Relationships with third parties in these countries are not essential to Kontoor’s European business and are of minor importance to Kontoor’s overall sales; However, we will continue to monitor the situation closely,” Baxter added.
“We offer our continued thoughts and support to the people of Ukraine and all people affected by these tragic events,” Baxter concluded.
About Kontoor brands
Kontoor Brands, Inc. (NYSE: KTB) is a global lifestyle apparel company with a portfolio led by two of the world’s most recognized consumer brands: wrangler® and lee®. Kontoor designs, manufactures and distributes high quality products that look good and fit right, giving people around the world the freedom and confidence to express themselves. Kontoor Brands is a purpose-driven organization focused on leveraging its global platform, strategic sourcing model and world-class supply chain to drive brand growth and create long-term value for its stakeholders. For more information on Kontoor brands, see www. KontoorBrands.com.
Certain statements in this press release and the attachments are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are based on our expectations and beliefs about future events affecting the Company and therefore involve a number of risks and uncertainties. You can identify these statements by their use of words such as “will,” “anticipate,” “estimate,” “expect,” “should,” “may,” and other words and phrases having a similar meaning or use of future dates. We caution you that forward-looking statements are not guarantees and actual results could differ materially from those expressed or implied by the forward-looking statements. We do not intend to update these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, except as required by US federal securities laws. Potential risks and uncertainties that could cause the Company’s actual results of operations or financial condition to differ materially from those expressed or implied by any forward-looking statements contained in this press release include, among others: Risks related to the COVID-19 -Pandemic, which could continue to result in closed factories and stores, reduced labor force, supply chain disruptions and reduced consumer traffic and shopping; the level of consumer demand for apparel; supply chain and shipping disruptions; intense industry competition; the company’s ability to assess consumer preferences and product trends and to respond to ever-changing markets; the ability to accurately forecast demand for products; the Company’s ability to maintain the image of its brands; increasing pressure on margins; e-commerce operations through the company’s direct-to-consumer business; the financial difficulties of the retail trade; dependence on a small number of large customers; the ability to implement the Company’s business strategy; the ability of the Company’s licensees to generate anticipated revenues and maintain the value of the Company’s brands; seasonality; continuity of members of management; the stability of manufacturing facilities and foreign suppliers; dependence on a limited number of suppliers for sourcing of raw materials and the ability to obtain raw materials in a timely manner or in sufficient quantity or quality; disruption of distribution systems; unusual or severe weather conditions; labor relations; operational difficulties and additional costs associated with the Company’s optimization and change management related to its enterprise resource planning software system; the Company’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that third-party facilities and systems may be susceptible to, and unable to anticipate or detect, data security breaches and loss of data or financial resources; ability to properly collect, use, manage and secure consumer and employee data; the effects of climate change and related legal and regulatory actions; legal, regulatory, political and economic risks; changes in trade policies, including customs and import/export regulations; Company’s and third party suppliers’ and manufacturers’ compliance with anti-bribery, anti-corruption and anti-money laundering laws; changes in tax laws and obligations; the costs of complying with or violating national, state and local laws and regulations relating to the environment, consumer protection, employment, privacy, safety and other matters; the Company’s ability to maintain effective internal controls; the ability to protect trademarks and other intellectual property rights; fluctuations in wage rates and the price, availability and quality of raw materials and contract products; exchange rate fluctuations; possible impairment of goodwill and other assets; disruptions and volatility in the global capital and credit markets and their impact on the Company’s ability to obtain short-term or long-term financing on favorable terms; the company maintains satisfactory credit ratings; restrictions on the Company’s operations in relation to its debt obligations; volatility in the price and trading volume of the Company’s common stock; anti-takeover and forum exclusive provisions in the company’s organizational documents; subordination of our common stock to debt and preferred stock; failure to declare future cash dividends; and fluctuations in the amount and frequency of the Company’s share repurchases. Many of the above risks and uncertainties are being exacerbated by the COVID-19 pandemic and any resulting further deterioration in the global business and economic environment. Additional information regarding potential factors that could affect the company’s financial results is described in detail in the company’s most recent Annual Report on Form 10-K and other reports and statements the company files with the SEC.