2023-08-03 15:41:19 ET
Kontoor Brands ( NYSE: KTB ) shares surged nearly 16% in afternoon trading on Thursday after the apparel maker beat second-quarter earnings driven by strength in its direct-to-consumer and international wholesale markets.
The owner of Lee and Wrangler brands, which has a market value of $2.28 billion, grew 20% so far this year.
Although second-quarter revenue of $616 million was flat, still it exceeded market expectation of $607.5 million. On an adjusted basis, it posted 77 cents per share, also above estimate of 63 cents.
“Revenue increases, primarily driven by strength in DTC and International, were somewhat tempered by decreases in U.S. wholesale,” the company said.
Second-quarter U.S. wholesale declined 3% compared to a year ago. However, Lee brand saw strength in the Asia-Pacific region, including China.
Kontoor, which reiterated its annual outlook, said that inventory is expected to decline in the current quarter compared to prior year with additional reductions planned in the fourth-quarter.
“While we continue to assume macroeconomic pressures will weigh on consumer demand in the second half of 2023, we are seeing shipments better align with POS in the U.S., which gives us confidence that third quarter revenue should deliver outsized growth relative to our full year guidance,” said chief executive officer Scott Baxter.
Seeking Alpha analysts and Seeking Alpha Quant Ratings consider the stock a “hold”, Wall Street rated it as “buy”.
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Kontoor Brands jump on strong second-quarter earnings