**Kontoor Brands’ Q3 Sales Rise Despite Drop in China**
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Kontoor Brands, the parent company of iconic denim brands Wrangler and Lee, reported a 1% increase in its third-quarter sales to $674 million, beating analysts’ estimates of $661.1 million..
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**North American Strength Offset China Weakness**
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The company’s sales in North America climbed by 8.3% thanks to robust demand for its workwear and casual apparel. This surge more than compensated for a 21.1% decline in sales from China, where brands have been struggling amid an economic slowdown and COVID-19 restrictions..
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**Performance by Brand**
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Wrangler, the company’s largest brand, witnessed a 3% increase in sales driven by growth in the United States and international markets, excluding China. On the other hand, Lee’s sales dipped by 2% due to the significant drop in China..
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**Operating Margin Improves**
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Kontoor Brands recorded an improvement in its operating margin from 11.2% in Q3 2022 to 12.6% in Q3 2023, reflecting cost control efforts and a favorable product mix..
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**Navigating a Challenging Environment**
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CEO Scott Baxter acknowledged the headwinds from rising inflation, interest rates, and foreign currency fluctuations. Despite these challenges, the company’s focus on innovation, cost management, and operational agility helped it deliver solid results..
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**Outlook and Expansion Plans**
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Kontoor Brands remained optimistic about the future, anticipating a positive holiday season and continued growth in 2024. The company’s expansion in international markets, particularly in Europe and Latin America, is expected to drive further growth..
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**Emphasis on Sustainability**
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Kontoor Brands highlighted its commitment to sustainability initiatives. The company is working towards using more sustainable materials and reducing its environmental impact throughout its supply chain..
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**Conclusion**
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Despite facing setbacks in China, Kontoor Brands demonstrated resilience and adaptability by leveraging its strength in North America and other markets. By focusing on innovation, cost control, and sustainability, the company is well-positioned to navigate the challenges and continue its growth trajectory..
