Kontoor Brands Q3 Earnings Miss Expectations Despite Revenue Growth
May 5, 2023
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The company is known for producing high-quality clothing and accessories for a variety of occasions, from casual wear to formal wear. This quarter, their revenues were boosted by strong sales in their core brands, such as Wrangler, Lee, and Rock & Republic. Despite this increase in revenue, Kontoor Brands ($NYSE:KTB)’ GAAP EPS still missed expectations. Higher costs associated with production and overhead expenses impacted the company’s profits, leading to the lower-than-expected earnings per share.
Kontoor Brands remains optimistic about the future, as they believe that their investments in innovation and product development will help them overcome this dip in profits. The company is also looking to expand globally, as they aim to become a major player in the apparel industry. They are confident that their commitment to creating innovative and quality products will help them reach their goals.
Earnings
In its latest earnings report for the FY2022 Q4 ending December 31 2022, KONTOOR BRANDS reported a 7.4% increase in total revenue and a 17.5% increase in net income. The company earned a total of 731.61M USD in total revenue and 51.6M USD in net income. This marks a significant increase in revenue compared to the previous year, with total revenue reaching from 660.86M USD to 731.61M USD in the last 3 years. Despite this impressive growth, KONTOOR BRANDS’ performance still failed to meet analyst expectations due to the ongoing challenges posed by the pandemic.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Kontoor Brands. More…
| Total Revenues | Net Income | Net Margin |
| 2.63k | 245.49 | 9.3% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Kontoor Brands. More…
| Operations | Investing | Financing |
| 83.58 | -30.12 | -170.91 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Kontoor Brands. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.58k | 1.33k | 4.52 |
Key Ratios Snapshot
Some of the financial key ratios for Kontoor Brands are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 1.1% | 21.1% | 13.5% |
| FCF Margin | ROE | ROA |
| 2.1% | 96.5% | 14.0% |
Stock Price
This translated to a 7.6% drop in the company’s stock price, closing at $41.1 after opening at $42.5, down from the previous closing price of 44.5. The company cited higher costs of goods sold, as well as investments in growth initiatives and its digital capabilities, as the primary drivers of the miss in EPS. Despite this, however, the company’s revenue growth can be seen as a positive sign for the future. Live Quote…
Analysis
GoodWhale has conducted an analysis of KONTOOR BRANDS‘ fundamentals. The Star Chart indicates that KONTOOR BRANDS is in a strong position when it comes to dividends and profitability, but is only medium in terms of assets. Growth, however, is weak. Based on this analysis, we classify KONTOOR BRANDS as a ‘rhino’, meaning that it has achieved moderate revenue or earnings growth. We believe that given KONTOOR BRANDS’ strong fundamentals, value investors would be interested in the company. Additionally, KONTOOR BRANDS has a high health score of 8/10 with regard to its cashflows and debt, which suggests that it is capable of riding any crisis out without the risk of bankruptcy. More…
Peers
Its competitors include Tristate Holdings Ltd, Kitex Garments Ltd, and Weyco Group Inc. All three companies are engaged in the design, manufacture, and marketing of apparel.
– Tristate Holdings Ltd ($SEHK:00458)
Tristate Holdings Ltd is a holding company that is engaged in a wide range of businesses in the Bahamas. The company’s businesses include investment holding, property development and management, food and beverage, retail, and others. The company has a market cap of 146.67M as of 2022 and a Return on Equity of 10.38%. Tristate Holdings Ltd is a diversified company with a wide range of businesses that provides investors with exposure to different industries and sectors. The company’s strong ROE indicates that it is a well-managed company that is generateing good returns for shareholders.
– Kitex Garments Ltd ($BSE:521248)
Kitex Garments Ltd is one of the leading garment manufacturers in India with a market cap of 13.72B as of 2022. The company has a Return on Equity of 15.26%. Kitex Garments Ltd is engaged in the business of manufacturing and exporting of readymade garments for infants, children and adults. The company has a wide range of products that include innerwear, outerwear, sleepwear and other garments.
– Weyco Group Inc ($NASDAQ:WEYS)
Weyco Group Inc is a publicly traded company with a market cap of 235.36M as of 2022. The company has a Return on Equity of 9.87%. Weyco Group Inc is engaged in the design, manufacture and marketing of footwear for men, women and children under the brands of Nunn Bush, Stacy Adams, BOGS, Florsheim, Umi, and Bates.
Summary
Kontoor Brands recently announced their GAAP EPS of $1.16 and revenue of $667.1M, both of which missed their respective estimates. This announcement caused their stock price to decrease on the same day. Investors should take this into account when analyzing Kontoor Brands. It is important to look at the underlying fundamentals of the company such as their balance sheet, cash flow, income statement, and other factors that may influence their stock price.
Additionally, one should analyze the company’s industry, as well as potential competitors and market trends. Investors should also consider other metrics such as return on equity and price-to-earnings ratio to determine the company’s financial performance. Finally, assessing the company’s leadership and management can provide insight into the company’s future direction and potential for success.
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