Kontoor Brands sees FY23 adjusted EPS $4.55-$4.75, consensus $4.46

Excluding restructuring charges associated with the strategic actions taken in Q2’23, the Company is reaffirming its prior outlook for FY23 with select updates to quarterly cadence. Accordingly, the Company’s 2023 outlook is as follows: revenue is expected to increase at a low-single digit percentage over 2022, consistent with the prior outlook, with second half performance now anticipated to be above first half growth. During the Q4 the Company assumes macro consumer demand conditions will be more challenged in the U.S., with the China market more fully reopening. Based on continued U.S. share gains, improving shipments and POS, as well as strong quarter-to-date trends, the Company anticipates Q3’23 revenue to increase at a mid-single digit rate, above expected full year growth. Sees FY23 adjusted gross margin 43.5%-44.0%, increasing 40 to 90 basis points compared to gross margin of 43.1% in 2022, consistent with prior outlook excluding restructuring charges in Q223. The Company continues to expect gross margin expansion in the second half driven by geographic and DTC mix, normalizing production and reduced input cost pressures. The Company continues to anticipate the most pronounced gross margin gains to be experienced in Q423. Adjusted SG&A is expected to increase at a mid-single digit percentage compared to adjusted SG&A in 2022.