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How Kontoor Brands Is Preparing for Another Year of Change and Opportunity

The environmental issues concerning denim production have not been lost on some of the most storied names in the business. Greensboro, N.C.-based Kontoor Brands Inc. is actively working on ways to make the manufacturing process for its heritage brands Wrangler and Lee more sustainable and responsible. Here, Kontoor Brands president and CEO Scott Baxter shares how the company’s efforts in sustainability and the impact from Covid-19 are transforming the way the company is working to navigate 2021 and beyond.

RIVET: Given how unprecedented 2020 was, how is 2021 shaping up for Kontoor?

Scott Baxter: We were pleased to finish 2020 with great momentum—growing our brands within existing categories and reaching new consumers in new segments and geographies. Like many companies in 2020, we also experienced the impacts of Covid-19. However, we were nimble and quickly focused on supporting the well-being of our employees and strengthening our financial position. We’ve also been flexible in evolving our strategies, leaning into many of the proactive initiatives that were already underway to help navigate the near-term environment and set the foundation for long-term success.

For our Lee and Wrangler brands, I’m proud to share that we are winning in the marketplace—taking share and adding incremental business. During 2020, according to NPD Group, we added more than 200 basis points of share within our core denim and casuals business in the U.S. market. Our strategies are paying off, with new innovation, sustainability and design initiatives helping to drive growth. As we look ahead, we are confident in our brand strategies and believe there is significant opportunity within the denim and apparel categories.

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RIVET: What is your outlook for denim sales in the U.S. versus overseas?

SB: Our improvements in 2020, despite the pandemic, are a function of the strategies we’ve implemented and the investments we’ve been making. One of our key areas of focus includes expanding geographically, with a focus on China. In late 2020, we launched our Wrangler brand in China on digital platforms first. We’re seeing good momentum, and are optimistic about the broader marketing launch this spring.

Currently, international revenue accounts for about 22 percent of our total business, and our Europe and China businesses ‘experienced sequential improvement in the fourth quarter. Our outdoor collection, Wrangler ATG (All Terrain Gear), as well as our Lee collaboration with H&M, which includes 100 percent recycled jeans, are examples of initiatives that are positioning Kontoor for long-term success in these regions.

RIVET: What about denim sales on the digital front? Do you think digital sales will continue to grow in 2021 or will customers more likely head back to stores once they feel comfortable to do so? And if digital remains a strong component, how will that impact your distribution strategy?

SB: Our strategies have positioned us well to navigate the ongoing impacts of Covid-19. One of our key strategies is ‘winning with the winning retailers’, and digital is a key pillar of that strategy as we expect continued strength in online sales. We saw accelerated improvement in our digital and direct-to-consumer channels in the fourth quarter and throughout 2020, which helped offset declines in other areas due to the pandemic.

Three of our largest customers—Walmart, Target, Amazon—have remained opened, positioning us well moving forward. And while digital will be a core strategy for us moving forward, we are committed to continuing to accelerate our ‘winning with the winning retailers’ strategy and growing with these customers who are continuing to see in-person foot traffic.

Kontoor Brands president and CEO Scott Baxter shares how the denim giant is preparing itself for another year of change and opportunity.
Scott Baxter Courtesy

RIVET: Denim has done well in 2020 compared with other apparel categories. Why do you think that’s so, even with all the talk about athleisure growing market share as office workers began working from home?

SB: Prior to the pandemic, we were already seeing a steady shift to more casual workwear. The ability to work from home has only accelerated that trend as people are opting for more comfortable attire. When more people begin returning to the office, we don’t believe that trend will go away. Denim has the unique ability to let you feel comfortable, yet still look sharp in a professional environment.

RIVET: Global sourcing and supply chain issues were key areas of concern last year for all manufacturers. Kontoor has much of its own manufacturing in the Western Hemisphere. How did that help the company navigate or leverage its production facilities in 2020? And what were the learnings in terms of what improvements were needed for 2021 and beyond?

SB: Our supply chain is uniquely positioned to manage through challenging periods given our diversified approach, which includes internally manufactured and sourced products, allowing us to scale production and minimize inventory and service delays. We produce about 36 percent of our production in our owned and operated manufacturing facilities and are able to leverage our manufacturing operations to quickly realign capacity with changing demand and marketplace conditions.

Earlier last year, we shifted part of our manufacturing operations in Mexico to produce medicals gowns. We donated about 70,000 of them to local hospitals and long-term healthcare facilities, in addition to producing gowns for healthcare supply chains. I am incredibly proud of our teams’ work to help our communities.

The events of the last year emphasized the importance of being nimble, quick and remaining on offense. Our supply chain teams did an excellent job of this prior to the pandemic, and leaned into this even more
throughout 2020.

RIVET: Denim has long been considered one of fashion’s biggest category polluters. Much of that is due to the amount of water used for dyeing and finishing. What is the company doing on the sustainability front?

SB: At Kontoor, our aspiration is to be a sustainability leader—not just based on what we say, but most importantly on what we do. In 2020, we announced our first global sustainability goals and published our foundational report on our sustainability progress. We are committed to providing transparency on our efforts to create a more sustainable business.

For example, we committed to saving 10 billion liters of water by 2025. One step toward realizing that effort is the expansion of our innovative dyeing process, Indigood foam-dye technology. Indigood Foam Dye replaces the traditional water vats and chemical baths of conventional indigo dyeing, reducing the amount of water required to turn denim blue by 100 percent. It also reduces energy use and waste by more than 60 percent and results in no wastewater. We’re proud to offer Indigood products across both our Wrangler and Lee brands and are committed to collaborating with others in the industry to further commercialize the technology.

Kontoor Brands president and CEO Scott Baxter shares how the denim giant is preparing itself for another year of change and opportunity.
HM x Lee Courtesy

RIVET: Let’s talk about some of the new product lines for Kontoor’s Wrangler and Lee brands. What do you think are some of the jeanswear trends that will be popular this year?

SB: Comfort continues to be king as consumers seek out relaxed, looser fits. Non-denim utility fits such as cargo and carpenter are also on the rise as consumers seek out fits that marry comfort with functionality. As we continue to see a move toward casualization, but also comfort and quality of product, I think it plays right into our current strategy. You see this in play with the expansion of our outdoor line, Wrangler ATG, or the dynamic comfort found in the Lee Extreme Motion MVP collection.

RIVET: What’s new for Kontoor’s brands in 2021 in terms of product lines or distribution?

SB: We’re really excited about the future of our brands. In 2021, we will continue to focus on reaching new consumers through new categories and segments, world-class design and innovation, sustainability platforms and investment in our brands and markets. As I mentioned previously, we continue to expand our outdoor collection, Wrangler ATG, including launching a female collection.

Collaborations with new brands and partners is also an important element of our growth strategy. I mentioned the collaboration with Lee and H&M, which is bringing the Lee brand into over 1,000 H&M doors across 61 countries, reaching younger consumers. Other recent powerful collaborations have included Keith Haring, Alife and Bianca Saunders, among others. You can expect to see more exciting brand collaborations soon.

This interview was conducted shortly after the company reported fourth-quarter earnings.

This article appears in the Spring 2021 edition of Rivet magazine. Click here to read the issue.