Sector: Apparel and Footwear Countries of operation: stores in more than 65 countries and sells online in 14 countries Key product categories: denim, apparel and accessories Annual Metrics [caption id="attachment_113562" align="aligncenter" width="700"] Fiscal year ends on December 31
*Trailing 12 months ended December 31 2020.[/caption]   Summary Kontoor Brands, Inc. is a global lifestyle apparel company that offers apparel, accessories, and denim products instore in more than 65 countries (including franchise markets) and in 14 online markets across the globe. It operates a portfolio of some of the world’s most iconic denim brands: Wrangler, Lee, and Rock & Republic. As of December 31, 2019, Kontoor Brands, Inc. operated a total of 129 stores across the Americas, EMEA and APAC regions. Company Analysis Coresight Research insight: Kontoor Brands separated from VF Corp in May 2019, aiming to differentiate and focus on its iconic denim brands: Wrangler and Lee. However, revenues of the Wrangler brand decreased 5% in FY19, driven by declines across all channels, and decreased 18% in 1Q20 due to the impacts of Covid-19. Revenues of the Lee brand decreased 8% in FY19 and decreased 24% in 1Q20. We perceive the status of Kontoor Brands operations as potentially problematic given the impact of restructuring, business model changes and relatively negative economic conditions. Kontoor Brands is also under-indexed in its T-shirt business—it sells roughly 500 pairs of jeans for every one T-shirt sold, which is a category opportunity that should be captured.

Tailwinds	Headwinds
Opportunities for sustained international expansions. Opportunities to revive sales growth under its current strategy. The scale and resources related to owning two popular denim brands—Wrangler and Lee—that focus on value.	Major US retailer bankruptcy and sluggish apparel markets in the West. Business model changes—including exiting underperforming countries and shifting from a direct to distributor or license model in Chile, Russia and Israel. Elevated competition from online young-fashion brands.

Strategy Kontoor Brands has outlined the following key focus areas to meet customers’ expectations and to futureproof the group: 1. Scale advantages in core denim business

a. Product innovation: Showcase and scale new product technologies and advanced manufacturing capabilities such as the Body Optix line—an advanced anatomy shading technology which enhances shaping of denim products.

b. Supply chain innovation: Leverage specialized manufacturing innovations, including laser technology and custom-made production equipment, and bring products to market faster.

c. Enhance sustainability: Generate technology that uses less water and produces less waste—for example, Indigood is the company’s innovation platform that uses groundbreaking waterless dyeing technology and uses 60% less energy in comparison with traditional methods.

2. Accelerate position in high-value segments, channels and geographies

a. Exit unprofitable markets in select international locations, specifically in Europe and South America.

b. Streamline and right-size supply chain operations, including closing three Kontor-owned manufacturing facilities in Mexico.

c. Consolidate and relocate select facilities and operations, including relocating the Lee business from Kansas to North Carolina and closing the Canadian headquarters office.

d. Redesign the commercial organizations in the US and Asia.

3. Build advantaged positions to reach new consumers in new and expanded channels

a. Launch innovative digital campaigns such as “Long Live Cowboys”, a digital Wrangler campaign.

b. Elevate the brand's authenticity in connecting with its customers.

c. Improve the omnichannel shopping experience for customers through continued integration of physical and online stores.

4. Drive an unwavering focus on margin expansion and improve capital efficiency

a. Strengthen near-term and long-term cash position and provide additional funding for working capital.

b. Work with supply partners around the globe to minimize inventory costs and service delays.

c. Implement technology solutions to enable global efficiency, such as the company’ recently introduced global enterprise resource planning system (ERP).

5. Create a highly engaged and performance-driven culture with a total shareholder return-driven approach

a. Instill an energized culture with a deep focus on performance, ownership and accountability by embedding drivers and outcomes of total shareholder return within key metrics and incentives.

b. Employ sustainable business practices and engage with communities.

The company plans to further define its future structure, operations and transition plans in the second half of 2020, including deepening global ERP implementation and digital enhancements. Company Developments

Date	Development
Mar 26, 2020	Kontoor Brands announced actions to strengthen its financial position including drawing down on revolving credit facilities.
Mar 9, 2020	Wrangler introduced a women’s workwear line, addressing increasing demand for fashionable and functional women’s workwear options.
Nov 14, 2019	Wrangler announced major expansion of its outdoor apparel line with launch of ATG by Wrangler.
Oct 1, 2019	Kontoor Brands committed to reducing packaging and its environmental footprint by joining Canopy's initiative Pack4Good.
Sep 18, 2019	Lee launched Shape Illusions, a size-inclusive female apparel line designed to flatter every body shape.
Sep 6, 2019	Wrangler unveiled the new global advertising campaign “Wear With Abandon”, designed to capture the cowboy spirit.
Jun 20, 2019	Rich Williams was elected to the Kontoor Brand Board of Directors.
Jun 4, 2019	Wrangler launched its first-ever collection using Indigood Foam-Dye Technology, which eliminates 100% of water from the denim dyeing process.
May 23, 2019	Kontoor Brands completed its separation from VF Corporation.

Management Team

• Robert Shearer—Chairman
• Scott Baxter—CEO
• Rustin Welton—CFO
• Chris Waldeck—Global Brand President at Lee
• Tom Waldron—Global Brand President at Wrangler

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Source: Company reports/S&P Capital IQ