Kontoor Brands, Inc. (NYSE:KTB) Q4 2022 Earnings Call Transcript

As I talked about, we’re now rolling out our retail excellence initiative throughout the region. And we’re going to be leveraging those learnings globally, taking those to our European stores and then also bringing that over here to the US. So, it’s really a way for us to connect experientially with our consumers in all of our markets and tell the story we want to tell around our brands. So, thank you for the question. I look forward to giving you more on that in the coming year.

Scott Baxter: Hey Bob, how are you. It’s Scott. The second question from a demand standpoint in our core, so we’ve done a really nice job, as far as focusing on our core. We’ve brought a lot of new people into the category, which I think is really important. But for us, we brought new people into the category in our digital platform, in our D2C platform, in our international platform. And then we were very, very thoughtful, Bob, as we laid out our strategy going forward about where we could play and how we could win. And we picked tees, outdoor and workwear as three categories that would be significant going forward that play into the heritage of our businesses that we have expertise within our company and that we know the channels and the geographies really well, and that has been a really good decision.

And I think the single most important thing relative to that for us is the opportunity to move forward with those, because they’re all still in really small categories for us, but very large macro categories. So we have a chance to really make and take a big position in those categories going forward. But I do want to emphasize, Bob, before I finish here, that we haven’t taken our eye off the ball from a core category standpoint, still it’s extremely important. As you can see, the numbers look really good. We still focus a lot of our demand creation in our consumer platforms around our denim categories, and we will stay laser-focused on that going forward. Thanks, Bob.

Bob Drbul: Thanks, Scott.

Operator: Thank you. Our next question is from Will Gardner with Wells Fargo. Please proceed with your question.

Will Gardner: Hey guys, good morning. Thanks for taking my question. The Wrangler 4Q results were — I mean they were really impressive, particularly in the US wholesale. Maybe just speak to what drove that growth in 4Q, the sustainability of that growth and how you’re planning revs for the US — for the US and internationally in ’23?

Tom Waldron: Yes. Thanks so much for the question. This is Tom. We’re really, really happy with the balanced growth that we had in the Wrangler brand. Certainly, what we’ve been doing from a brand standpoint in terms of executing what we consider a very advanced playbook, investing behind the brand, bringing beautiful product to life and then really just from a demand creation standpoint, inviting in new consumers, utilizing Georgia May Jagger, Leon Bridges, but also connecting with our core consumer. I’m really proud of the way we’re able to do this as an end strategy, with collaborations such as Yellowstone, Lukasi and Buffalo Trace. We will continue to do that. More to come on that in terms of collaborations into 2023, but we’re really excited about the brand momentum as we move forward.

Will Gardner: And maybe just how are you planning the business into ’23 from a top line perspective?

Rustin Welton: Yes. So, Will, it’s Rustin. I’ll just jump in there. As we kind of indicated, Scott talked about it a little bit in his opening remarks, as you think about that the halves, really the front half is driven by US growth and tempered by international and then kind of almost flipping as you get to the back half, certainly as China reopens, more fully expect international to drive more of that back half growth and then partially offset by macro conditions, which we’re taking a prudently conservative approach as we’re thinking about increasing pressure on consumer demand in the US. So hopefully, that gives you a little bit of a sense of the halves.