The US company Kontoor Brands, Inc., whose portfolio includes the two denim brands Wrangler and Lee, for example, generated sales of 605.7 million euros (667 million US dollars) in the first quarter of 2023. This corresponds to a sales loss of two percent compared to the previous year. The quarter ended on April 1st.
Revenue increases were primarily driven by strength in domestic wholesale and DTC businesses, the company said, and were more than offset by declines in international wholesale. The declines are primarily due to the ongoing impact of COVID guidelines in China.
The strongest market was the US home market with sales of 470 million euros (518 million US dollars), an increase of two percent compared to the same period last year. US wholesale trade was up 1 percent compared to the first quarter of 2022, including the strength of digital wholesale, which grew 11 percent year-on-year.
Sales fell in China and Europe
International sales were €135 million (US$149 million), down 14 percent (9 percent at constant currency) from the same period last year. The main reason for this was wholesale, which was offset somewhat by the strong DTC performance. The international DTC business increased by ten percent.
As expected, sales in China fell 36 percent compared to the first quarter of 2022, due to the impact of COVID changes in wholesale. China DTC rose three percent. Sales also fell in Europe, where it was seven percent (currency-adjusted one percent). In contrast, DTC sales in Europe increased 15 percent (22 percent at constant exchange rates) compared to the same period last year.
Worldwide sales for the Wrangler brand were 383.7 million euros ($423 million), up 3 percent from the same period last year. The Lee brand made global sales of 218.5 million euros ($241 million), down 9 percent.
“The results for the first quarter are in line with our expectations and the comments we made during the fourth quarter conference call. As expected, our brands continued to gain market share in the US, where sales outpaced shipments this quarter. Domestic gains were dampened by expected weakness in international markets. In addition to market share gains and positive sell-through, the robust performance of our own DTC business during the quarter validated that our brands are resonating with consumers and winning in a challenging market,” said Scott Baxter, CEO of Kontoor Brands.
Revenue growth in the low single-digit percentage range is expected for fiscal year 2023, which is in line with the previous outlook.