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2020 in Review: Kontoor’s Brand-Building Investments Pay Off for Wrangler and Lee

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The unprecedented events of 2020 put companies’ manufacturing, distribution and products to the ultimate test, even for names like Kontoor Brands-owned Wrangler and Lee that have the benefit of multi-generational, global brand recognition.

The heritage brands, however, were well positioned for the challenges brought on by the pandemic, thanks in part to Kontoor’s laser-sharp focus on the business of denim.

Though the company reported significant business impacts from Covid-19 on Q1 revenue and profit, the NPD Group reported that both Lee and Wrangler saw accelerating U.S. share trends during Q3, ending the quarter with solid increases across both men’s and women’s denim. And revenue in the fourth quarter is expected to show sequential improvement.

Kontoor Brands president and CEO Scott Baxter credited the improvements to the strategic initiatives that the company has been executing since the spinoff from VF Corp. last year. “They’re great brands, incredible history and that, with a little bit of investment, with a little bit of strategy, with a lot of marketing, we can really make something special out of [them],” Baxter said.

Diverse distribution

Wrangler and Lee indeed found themselves of sturdier ground during uncertain periods in 2020 that put intense strain on the relationships between brands and their manufacturing partners. Rustin Welton, Kontoor Brands chief financial officer, pointed to the company’s owned manufacturing as a “distinct competitive advantage” that allowed it to scale production accordingly.

By leveraging its own manufacturing in the Western Hemisphere, he said the company was able to service its large customers with scale and speed. A strong manufacturing backbone allowed Kontoor to quickly respond to market demands and produce products for various tiers and customers—a crucial component to Wrangler’s and Lee’s expansion into new markets.

“We have a diversified, world-class supply chain,” Welton said. “We’re sourcing or operating from over 275 factories in 20 countries that [have] enabled us to continue to supply the market and really believe we offer a quality product at compelling value in all of the channels of distribution that we have.”

Having a footprint in multiple channels was part of Kontoor’s plan to be a bigger player in the denim category in 2020. The company acted on this through multiple collaborations and expanding product lines in new regions.

This year Wrangler saw its All Terrain Gear (ATG) line explode in Europe with new distribution at 400 Dressmann locations. The Wrangler by Fred Segal collection available at Nordstrom proved that the brand can support a higher price point, while a series of capsule collections showed the brand’s pop culture prowess, including collaborations with Bob Marley and most recently, hit television shows “Stranger Things” and “Rick and Morty.”

Wrangler also made its long-awaited debut in China through a partnership with Alibaba Group’s Tmall e-commerce site.

Likewise, Lee displayed its ability to offer fashion and function with a fall collection inspired by ’90s skate culture, an ongoing collaboration with New York streetwear brand Alife and a partnership to outfit agriculture tech company AppHarvest’s entire workforce.

Lee and Alife dropped a new fashion capsule collection that puts an '80s B-boy-inspired streetwear twist on White Oak selvedge denim.

Lee x Alife

Lee made a big push in China as well, where it sold 4,000 women’s shorts in 25 seconds and 8,000 pairs of jeans in 30 minutes during live-streaming events. It also launched Lee at 2,000 Walmart stores.

Kontoor’s distribution at retailers that consumers have relied on throughout the pandemic, like Amazon, Walmart and Target, has placed the company in a better position than competitors that have historically relied on mall foot traffic. But Baxter said a major area of strategic focus—accelerating digital—is a primary catalyst of Kontoor’s “evolving distribution strategy.” The company’s online business is already gaining momentum. Lee.com sales increased 27 percent in Q3, while Wrangler.com’s sales climbed 38 percent.

“We will continue to [focus] our investments in developing our digital ecosystem as the consumer will be at the center of everything we do,” Baxter said.

Stance on sustainability

Despite the pressures of the global pandemic, Kontoor Brands didn’t slow down sustainability efforts. The company released its first-ever sustainability report in September and extended its goals centered on planet, product and people through 2030.

The company joined brands like Gap and Levi’s in supporting HERproject, a global initiative that focuses on supporting low-income women working in global supply chains. The program’s HERhealth provides access to healthcare information, critical health services and products to factory partners in Bangladesh and Kenya, and has proven to decrease the number of absences related to health.

“In Bangladesh, women comprise more than 65 percent of the garment industry workforce,” said Wesley Gibson, Kontoor Brands vice president and managing director, product supply. “That’s why it’s critically important for us to protect and promote women’s rights in the workplace, and engage in projects like HERhealth—a program that educates women on nutrition, hygiene practices, children’s health and family planning.”

Among its environmental commitments, Kontoor announced plans to power all of their owned and operated facilities with renewable energy by 2025 and establish a science-based climate target by 2022.

By focusing on the fiber production, fabric construction and product-finishing phases of the denim supply chain, which encompass more than 95 percent of the total water used throughout the production of a pair of jeans, Kontoor said it will be able to cut its water usage in half by 2030.

The same year, Kontoor aims to use 100 percent preferred chemistry, meaning it will use advanced chemical screening procedures and require strict supplier compliance with the global restricted substance list.

It is also taking steps to source 100 percent sustainable raw materials, including synthetics by 2023. Kontoor was among a group of fashion giants to collaborate with Infinited Fiber Company to develop a viable circular alternative to virgin cotton. Infinited Fiber Company says its technology can turn any cellulose-rich material like old clothes, used cardboard or even agricultural waste like straw, into a biodegradable and “re-recyclable” soft fiber with a natural look and feel.

And more sustainable milestones are to come. The company is inviting global cotton farmers who can demonstrate and document soil-carbon and biodiversity improvements to apply for their cotton to be purchased for a future Wrangler Retro Premium jean collection. The company is also developing a comprehensive water balance study that looks at the denim industry’s water consumption by production phase with Transformers Foundation.

“We have an opportunity to address some of our industry’s most pressing global issues and are committed to being a good corporate citizen as we operate in the world,” said Roian Atwood, Kontoor Brands’ senior director, global sustainable business.

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