KTB Q3 Earnings Beat Estimates, Raised Guidance Propel Stock Higher

Kontoor Brands, Inc. KTB reported third-quarter 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Both revenues and earnings increased year over year.KTB’s stock soared 11.9% on Oct. 31, driven by better-than-expected results and an upbeat earnings forecast for 2024. Management expects continued stabilization in the industry for the remainder of the year.The company’s success story hinges on its exceeding expectations due to solid execution and robust business fundamentals. The ongoing investments in Kontoor’s Brands have been instrumental in achieving market share gains, expanding distribution, and supporting category growth alongside innovation platforms.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Kontoor Brands, Inc. Price, Consensus and EPS Surprise Kontoor Brands, Inc. price-consensus-eps-surprise-chart | Kontoor Brands, Inc. QuoteAnalyzing KTB’s Quarterly PerformanceKontoor Brands, a global lifestyle apparel company, delivered adjusted earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.25 per share. On a GAAP basis, earnings came in at $1.26, down from $1.05 recorded in the year-ago period.Net revenues of $670.2 million increased by 2% from $654.5 million reported in the prior year quarter and surpassed the Zacks Consensus Estimate of $660 million. The increase  stemmed from growth in direct-to-consumer and the U.S. wholesale, somewhat negated by a decrease in international wholesale revenues.Adjusted gross margin of 45% expanded 150 basis points (bps) year over year. Benefits from lower product costs and supply chain efficiencies were partly negated by lower pricing.On an adjusted basis, SG&A of $194.8 million rose 5% year over year. The metric rose on account of demand creation investments, product development, and distribution expenses.Adjusted operating income of $107 million increased 8% year over year on a reported basis. Adjusted operating margin of 15.9% improved 80 bps year over year excluding the out-of-delivery duty charge in that period.Insights Into KTB’s Segmental DetailsThe U.S. revenues of $530 million improved 5% year over year. The U.S. wholesale revenues increased by 5% driven by expanded distribution, market share gains, and robust point-of-sale activity. However, this was partially offset by retailers managing their inventory levels more conservatively. Direct-to-consumer rose 5% driven by a 9% surge in digital slightly offset by a 2% decrease in brick-and-mortar retail.International revenues of $141 million fell 5% on a year-over-year basis. The decrease was largely due to a 7% drop in international wholesale, while direct-to-consumer sales remained flat. Digital sales grew by 11%, offset by a 6% decline in brick-and-mortar retail. On a regional basis, Europe, and Non-U.S. Americas experienced a decline of 6% and 12%, respectively, Meanwhile, sales in Asia improved by 2% on a 5% increase in wholesale revenues, offset by a 7% decline in direct-to-consumer sales.Brand-wise, Wrangler's global revenues of $464 million increased 3% year over year. In the U.S., Wrangler saw a 2% revenue gain, driven by 10% growth in direct-to-consumer sales and a 5% increase in wholesale. Internationally, Wrangler's revenues declined by 3%,  due to a drop in wholesale, although this was partially offset by growth in direct-to-consumer channels.Lee brand’s global revenues tumbled 3% year over year to $202 million. In the United States, Lee brand’s revenues declined by 1%  because of growth in the wholesale channel, somewhat offset by a decline in direct-to-consumer sales. Internationally, Lee's revenue declined by 7%, impacted by decreases in wholesale and brick-and-mortar retail, partially balanced by growth in digital sales.KTB’s Financial SnapshotThe company ended third-quarter 2024 with cash and cash equivalents of $269.4 million, long-term debt of $744.9 million, and stockholders’ equity of $359.9 million.What to Expect From Kontoor Brands in 2024?Kontoor Brands updated its guidance for 2024. It forecasts revenues of $2.60 billion, compared with $2.57-$2.63 billion expected earlier. This includes revenues of $695 million in the fourth quarter, reflecting a rise of 4% year over year.Management anticipates an adjusted gross margin of 45.1% compared to the 44.8% mentioned earlier, implying an expansion of 260 bps from the prior year.On an adjusted basis, Kontoor Brands now expects an adjusted operating income of $385 million, which is at the higher end of  the earlier estimate of $377-$387 million. The current projection represents an increase of 11% from the prior-year levels. The adjusted operating income reflects a $6 million impact from supply chain and inventory management actions, as mentioned in the earlier outlook.The company expects adjusted earnings per share to be $4.83 compared with its prior forecast of $4.80. Excluding the out-of-period duty expense in the prior year, adjusted earnings per share is now anticipated to improve 9% compared with the earlier guided range of 8% increase. In the fourth quarter, the company anticipates adjusted earnings per share of $1.31.Adjusted SG&A is anticipated to rise by 4% year-over-year, in line with the previous forecast.Cash from operations is expected to increase to $360 million for 2024 versus $350 million expected earlier. Capital Expenditures are envisioned to be $25 million compared with the  $35 million mentioned earlier.Shares of this Zacks Rank #3 (Hold) company showed an impressive rise of 18.7% in the past three months compared with the industry’s growth of 17.1%.Image Source: Zacks Investment ResearchThree Picks You Can’t MissWe have highlighted three better-ranked stocks, namely G-III Apparel Group GIII, Wolverine World Wide WWW and Gildan Activewear Inc. GIL andG-III Apparel sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII’s current financial-year sales indicates an increase of 3.3% from the year-ago period’s reported level.Wolverine is engaged in the designing, manufacturing and distribution of a wide variety of casual and active apparel and footwear. It currently flaunts a Zacks Rank of 1.The Zacks Consensus Estimate for Wolverine’s 2024 EPS of 85 cents indicates a substantial increase from the 5 cents reported in the year-ago quarter. WWW has a trailing four-quarter earnings surprise of 7.5%, on average.Gildan Activewear, a distributer and manufacturer of activewear products, currently carries a Zacks Rank #2. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.The Zacks Consensus Estimate for Gildan Activewear's current fiscal-year earnings and sales suggests an improvement of 14% and 1.5%, respectively, from the year-earlier levels.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report G-III Apparel Group, LTD. (GIII): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report Kontoor Brands, Inc. (KTB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks