Business

Scott Baxter’s Kontoor Looking to Grow Through Macro Troubles – WWD


Vogue flourished final yr from prime to backside as shoppers reawakened from the worst of the COVID-19 lockdowns — however now one other shakeout appears within the offing with inflation and provide chain turmoil assembly COVID-19 and geopolitical uncertainly from Russia’s warfare in Ukraine.  

However Scott Baxter, president, chairman and chief govt officer of Kontoor Brands Inc., stated the modifications the Lee- and Wrangler-parent firm has made since spinning off from VF Corp. in 2019 will land it among the many winners in style’s future. 

“You’re going to see the separation there in ‘22 and ‘23 by really well-run companies,” Baxter advised WWD, referring to the divide between the winners and losers within the extra unsure future.

Whereas everybody gained final yr, he stated the winners going ahead may have “a really good strategy, have a really good balance sheet [and] are investing back into their brands and their business and their people.”

“We like to think that we’re in that category,” the CEO stated. 

Baxter stated that, finally, it’s the outcomes that present whether or not a technique is the best technique. He stated Kontoor has wagered on digital, T-shirts, workwear and out of doors and that “all of those big bets have paid off.” 

The agency’s first-quarter web earnings elevated 25 p.c to $80.8 million, or $1.40 a diluted share, properly forward of the $1.15 to $1.25 the corporate guided to. Yr-ago earnings tallied $64.5 million, or $1.09 a yr in the past.

Revenues for the three months ended April 2 elevated 4 p.c to $679.7 million from $651.8 million. That put the highest line $20 million to $30 million forward of the corporate’s steering.  

Kontoor nudged up its outlook for the yr and is now in search of earnings per share to rise 11 p.c to 13 p.c to a variety of $4.75 to $4.85, up from earlier steering calling for EPS of $4.65 to $4.75. Revenues are actually slated to develop about 10 p.c to greater than $2.7 billion the place the agency beforehand guided to high-single-digit progress.

The Lee and Wrangler manufacturers are, in impact, waking up and asserting themselves after being a part of the much-larger VF, the place the main focus was on powerhouse manufacturers like The North Face. 

“We kind of lost our consumer a little bit,” Baxter stated of the time earlier than the spinoff. 

Now the corporate is investing in model. 

On a convention name with analysts, Baxter talked about “demand creation” and detailed investments in promoting. 

Lee launched the Lee Originals fairness marketing campaign final yr and likewise partnered with influencers “that sparked heightened brand awareness from SoHo to London to Shanghai,” Baxter stated. The model may even be sponsoring the Bonnaroo music pageant in June. 

Likewise, Wrangler, celebrating its seventy fifth anniversary this yr, is reaching out to new shoppers on social media and seeking to construct its presence. 

Within the interview, Baxter stated that work on picture — in addition to investments to construct the digital enterprise — depart the manufacturers in good stead. 

And he stated each Wrangler, significantly within the Southwestern U.S., and Lee, in China, have been positioned to realize as soon as journey spending began again up. 

The denims names are additionally set to learn from what many name a robust denim cycle, which Baxter described as extra of a everlasting pivot. 

“It’s not a cycle,” he stated. “Cycle implies to me that you’re going to cycle out. I just don’t see a cycle out. Denim is here to stay. Causal is here to stay, that is not going back.” 

On the identical time, the CEO is aware of there are extra modifications in retailer for the market this yr, however believes central bankers will get inflation beneath management by subsequent yr. 

And that’s very a lot in step with the Baxter ethos. 

“We pride ourselves on being optimistic, but also grounded in reality,” he stated. “We understand what’s going on in the marketplace, but we’re not going to let that dictate our results and we’re going to go ahead and play offense in a very difficult environment and we’re going to control our own destiny. I call it leadership and we’re goin to lead this industry and that’s what’s happening.” 

In a really dangerous day for the market, the place the S&P 500 traded down 3.8 p.c, Kontoor’s shares have been off 1.6 p.c to $40.50 in noon buying and selling.

 

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Fashion’s ‘Reverse Inflation’ Has Cost Hikes Following Pricing Gains

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