On August 1, 2024, Kontoor Brands Inc (KTB, Financial) released its 8-K filing for the second quarter of 2024. Kontoor Brands Inc is a lifestyle apparel company engaged in designing, manufacturing, sourcing, marketing, and distributing its portfolio of brands, including Wrangler and Lee. The company generates the majority of its revenue from the Wrangler segment, with significant contributions from both the United States and international markets.
Performance Overview
Kontoor Brands Inc reported revenue of $607 million for Q2 2024, a slight decrease of 1% compared to the prior year. Despite this, the company exceeded analyst estimates of $596.14 million. The reported earnings per share (EPS) were $0.92, with an adjusted EPS of $0.98, surpassing the analyst estimate of $0.87 and reflecting a 27% increase from the previous year.
Key Financial Achievements
Kontoor Brands Inc achieved a reported gross margin of 44.7%, with an adjusted gross margin of 45.2%, marking a 410 basis point increase compared to the prior year. The company also reported a significant decrease in inventory by 22% year-over-year, which is a positive indicator of efficient inventory management.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenue | $607 million | $616 million | -1% |
| Gross Margin | 44.7% | 40.6% | +410 bps |
| Adjusted EPS | $0.98 | $0.77 | +27% |
Balance Sheet and Cash Flow
Kontoor Brands Inc ended the second quarter with $224 million in cash and cash equivalents and $750 million in long-term debt. The company made a $25 million voluntary term loan payment and repurchased $25 million of shares during the quarter. Additionally, the Board of Directors declared a regular quarterly cash dividend of $0.50 per share.
Updated Full-Year 2024 Outlook
Based on the strong Q2 performance, Kontoor Brands Inc has raised its full-year 2024 outlook. The company now expects revenue to be in the range of $2.57 to $2.63 billion, with an adjusted EPS of approximately $4.80, up from the previous estimate of $4.70 to $4.80. Cash from operations is expected to exceed $350 million, an increase from the prior estimate of $335 million.
"We delivered second quarter results that exceeded our expectations driven by higher revenue, stronger gross margin expansion, and cash flow generation," said Scott Baxter, President, Chief Executive Officer, and Chair of Kontoor Brands. "Our fundamentals continue to improve, providing us with significant optionality to drive long-term value while returning more than $100 million to shareholders year-to-date."
Analysis and Conclusion
Kontoor Brands Inc's Q2 2024 performance demonstrates resilience and effective management amidst a challenging retail environment. The company's ability to exceed revenue and earnings expectations, coupled with improved gross margins and efficient inventory management, positions it well for sustained growth. The raised full-year outlook further underscores management's confidence in the company's strategic direction and operational execution.
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Explore the complete 8-K earnings release (here) from Kontoor Brands Inc for further details.
