During the company’s Q2 2022 earnings call Thursday, Scott Baxter, president, CEO and chair of Kontoor Brands, said the expected declines in international business owing to China lockdowns and timing shifts of shipments in Europe were offset by strength in the U.S. with both the Wrangler and Lee brands up at least 40 percent domestically.
To paint a more normalized assessment of business, Baxter said Wrangler’s and Lee’s U.S. business increased 19 percent and 14 percent respectively over the first half of 2019.
“In our largest market, both brands have driven significant share gains in the core men’s denim casual bottoms business over first half [of 2019] with Wrangler up 80 points and Lee up 60 points and [it] would be even greater if not for our proactive quality of sales actions to exit certain points of distribution,” he said.
“These gains in our largest market were supported by the breadth and development of our product portfolio in Q2,” he continued.
Though denim is Kontoor’s foundation, complementing categories are showing their bottom-line impact. Wrangler’s Western summer seasonal bookings were up double-digits. In addition, ATG’s expansion into dual-gender fishing gear is seeing growing momentum at fishing sports specialty stores.
The brand is also enjoying the benefits of several high-profile partnerships, including a collaboration with Fender and as the exclusive denim sponsor of two Lollapalooza music festivals as well as Austin City Limits.
Up next, Wrangler is gearing up for a 75th anniversary event in New York City that will include a preview of the Wrangler x Leon Bridges collection, followed by a performance from the Grammy Award-winning musician.
At Lee, Baxter said men’s saw strong performance within core denim, casuals and seasonal products, with the brand driving share gains across all male categories in the quarter. The brand’s women’s segment experienced solid double-digit growth as performance-driven denim like Flex Motion and Ultra Lux saw gains.
Lee’s “enhanced marketing efforts” are paying off as well. The summer campaign, “Free Your Originality” by Lee Originals drove holistic digital experiences across consumer touch points supporting 61 million digital media impressions and a 103 percent year-over-year increase in social media traffic during the quarter. The brand also had a unique presence at Bonnaroo Music Festival, where it created a 900-square-foot tree made from Lee denim scraps.
Despite a strong showing in the U.S., the future is global for Kontoor Brands.
“We remain highly under-index in markets outside of the U.S. as most of our peers do nearly 50 percent of their business internationally, so a significant opportunity for us to nearly double the size of our business over time,” Baxter said.
The company is further globalizing its operating model and announced it is relocating its European headquarters in Antwerp, Belgium to a “mega headquarters” in Geneva.
“We are really excited about these initiatives as they better position us to attract world class talent in the region, unlock significant benefits for our organization, and further support the transition to a growth oriented model,” Baxter said.
He pointed to the move’s “significant” long-term benefits, including greater capital efficiency, stronger go-to-market capabilities and enhanced SKU rationalization.
“The announcement reflects our commitment, [even] when macro conditions remain difficult, to continue to strategically invest for long-term, sustained, profitable growth,” he said.