Wrangler Leads Kontoor’s Q2 Gains as Western Goes Global

With the toughest part of the year behind it, Wrangler and Lee parent company Kontoor Brands said it is entering the second half of the year with momentum.

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On Thursday, the Greensboro, N.C.-based company reported Q2 2024 revenue decreased 1 percent to $607 million compared to prior year.

Kontoor said the revenue decline was driven by retailer inventory management actions in the U.S., a decrease in revenue from seasonal product and lower international revenue, partially offset by growth in direct-to-consumer (DTC), and an approximate 2-point benefit from the earlier timing of shipments in U.S. wholesale from the third quarter into the second quarter.

In the U.S., revenue was $496 million and decreased 1 percent compared to the prior year. Growth in DTC was more than offset by a 1 percent decline in wholesale revenue.

International revenue decreased 6 percent $111 million. Kontoor reported Europe revenue decreased 5 percent, with 3 percent growth in DTC more than offset by an 8 percent decline in wholesale. In Asia, revenue Asia decreased 13 percent and saw a 26 percent decrease in wholesale. Non-U.S. Americas increased 2 percent driven by growth in wholesale.

International DTC increased 3 percent, with 25 percent growth in digital partially offset by an 11 percent decrease in owned brick-and-mortar stores

With “better than expected” Q2 results, Scott Baxter, Kontoor Brands president, CEO and chairman, said the company is raising its full year outlook to be in the range of $2.57 to $2.63 billion. “To fuel our momentum, we are making incremental investments in both brands starting in the third quarter to support accelerating revenue, expanding distribution and category growth, as well as continued market share gains. While we will continue to manage the business conservatively in light of the uncertain environment, in the second half of the year we expect accelerating revenue growth, double-digit operating earnings growth, and significant cash generation.”

Lee

Lee brand global revenue was $175 million, down 7 percent compared to the prior year. Lee U.S. revenue decreased 3 percent driven by reduced shipments to the wholesale channel and a decline in direct-to-consumer. Lee international revenue decreased 13 percent.

Baxter said the brand is seeing green shoots with younger and female consumers. In Gen Z, Lee’s women’s segment saw a 42 percent increase in perceived brand equity and a 36 percent increase in purchase consideration over the last 12 months. Lee’s core bottoms and shorts business gained approximately 20 basis points of market share in the U.S., according to data from Circana.

Several initiatives in the second half are poised to accelerate Lee’s business and raise its profile with consumers, however. This week, Lee bowed a new back-to-school collaboration with Forever 21. It is also gearing up for the global launch of Lee X, which Baxter described as a line of bottoms, tops and non-denim that combine performance innovation with “elite comfort and world-class aesthetic at incredible value.” Lee X will be available through wholesale and DTC channels at the end of the year and scale in 2025.

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The heritage brand also has a collaboration with Paul Smith to look forward to in Spring 2025. “These collaborations speak to the younger consumer that is seeking the brand while expanding into new categories,” Baxter said.

Wrangler

Wrangler’s collaborations with artists such as Lainey Wilson and Cody Johnson are bringing a new generation of consumers into the brand.

Wrangler brand global revenue was $429 million, a 1 percent increase compared to the prior year. The brand’s U.S. revenue was flat, with 10 percent growth in DTC offset by a 1 percent decline in wholesale. Wrangler international revenue increased 7 percent. Baxter said the growth was fueled by continued share gains and expansion into new categories. In Q2, Wrangler’s core bottoms and shorts business gained nearly 100 basis points of market share in the U.S., according to Circana.

POS trends in the U.S. also accelerated through the second quarter, Baxter said, increasing 4 percent in June—Wrangler’s strongest month year to date. “Behind the strength is a combination of product and demand creation platforms that are resonating with consumers like never before,” he said.

To keep the momentum going, Wrangler will bow its first commercial across broadcast TV and live sports this September. The brand will also launch its largest collaboration to date with Wilson and roll out Wrangler Bespoke, a new collection that addresses the challenges and pain points associated with women’s denim.

Wrangler’s outdoor brand ATG by Wrangler continues to be bright spot. The business grew 25 percent in the quarter with products like utility pants (which saw triple-digit increases in the Q2) bringing value to the market. New products like the ATG Chino and Cliffside Utility pant will keep the momentum going. “We believe we are just getting started and have a long runway for outsize growth, including double digit increases this year,” Baxter said.

U.S. revenue for Wrangler’s western business grew 8 percent. While buzz for western denim blew up earlier this year, Baxter said he avoids paying too much attention to denim moments or denim cycles, adding, “I think we’re kind of well past that in the denim. Denim is just acceptable everywhere.”

The western category, however, remains a steady part of Kontoor’s business and it continues to grow and become more global. “We get asked if western travels around the world and the answer is clear yes. In Europe, we are seeing similar strength with the consumer across western bottoms and tops which is attracting a younger and more female consumer into the brand,” he said.

“We’re all in on the western side. We just continue to resonate really strongly with our consumer,” he said. “If you’re a real cowgirl and a real cowboy, you’re wearing Wrangler. It’s just that simple.”

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