The US clothing group Kontoor Brands Inc. had to accept a decline in sales and profits in the third quarter of the 2022 financial year. As a result, the parent company of the Wrangler and Lee brands lowered its annual forecasts on Thursday.
Group sales for the most recent quarter ended October 1st were $606.5 million (€622.6 million), down 7 percent from the same period last year. Adjusted for exchange rate changes, revenues fell by five percent. The company cited losses in the US wholesale business and the negative impact of the Covid-19 protective measures in China as reasons for the decline. In contrast, the clothing supplier was able to achieve growth in its own online business and in the EMEA region, which includes Europe, the Middle East and Africa.
The decline in sales as well as higher freight costs and negative currency effects weighed on the result. Operating profit fell by 13 percent to 75.1 million US dollars compared to the same quarter last year. Net income fell 19 percent to $51.1 million.
In the first nine months of the current year, group sales amounted to 1.90 billion US dollars, which corresponded to an increase of six percent (currency-adjusted +8 percent) compared to the same period last year. Net income grew 28 percent to $193.9 million.
Although management expects better sales development for the fourth quarter, “difficult macroeconomic conditions” have prompted management to downgrade its full-year guidance. After an increase in sales of around six percent had previously been expected, the company now only expects an increase of around four percent (currency-adjusted +6 percent). The target range for adjusted diluted earnings per share was lowered to $4.35-$4.40 from $4.40-$4.50.