The US clothing group Kontoor Brands Inc. suffered losses in sales and earnings in the 2023 financial year. The parent company of the denim brands Wrangler and Lee then announced extensive reforms on Wednesday.
Group sales last year amounted to 2.61 billion US dollars (2.41 billion euros). This was one percent below the 2022 level. Sales of the Wrangler label remained almost constant year-on-year at $1.75 billion, while the Lee brand reported a decline of four percent to $842.5 million.
Due to higher product costs, more extensive discounts and one-time charges, operating profit fell 10 percent to $319.3 million. Net profit was 231.0 million US dollars (213.7 million euros), six percent below the previous year’s level.
The group wants to improve its results with the “Jeanius” reform program
In addition to the current results, the group also presented its new, multi-year reform program “Jeanius”. The plan is to simplify the global business model and the associated activities. The focus is particularly on optimizing the supply chain.
The aim of the project is to “develop capital sources” to generate additional funds to invest in growth opportunities and increase profitability, the company said. Specifically, the measures are intended to help increase gross profit by $50 to $100 million in the medium term.
Management expects the first effects of the reforms to occur in the final quarter of the current 2024 financial year. However, the potential savings are not yet taken into account in the current forecasts. These envisage annual sales in the range of 2.57 to 2.63 billion US dollars. Diluted earnings per share adjusted for special items are expected to reach between $4.65 and $4.75, increasing by four to seven percent compared to 2023.