CEO of Wrangler mother or father says ‘international casualization’ will dominate attire market

The casual clothing boom that grew out of the Covid pandemic will continue to lead apparel sales, Kontoor Brands President and CEO Scott Baxter told CNBC on Thursday. 

“You’ve seen a global casualization that’s taking hold right now, so I tell people it’s not cyclical, this is here to stay. This is how the world is going to look going forward,” Baxter said on “Power Lunch.”

“People are going to dress more casual and more comfortable,” he said. “They’re very confident in denim and T-shirts, and they feel like it’s an expression, too … after being home for a year and a half, nobody wants to update their wardrobe to a really high dress wardrobe.”

Sales soared for clothing items such as pajamas and T-shirts when consumers began spending most of their hours at home in 2020, and apparel companies popularized the comfort-cozy wardrobe trend. Americans are keeping a pandemic-inspired “work-leisure” style as they return to the office this fall, and major brands and department stores are offering more casual items.

Kontoor Brands, which primarily sells denim under the Wrangler, Lee and Rock & Republic brands, reported $491 million in second-quarter revenue, a 41% increase compared with last year. Wrangler’s global revenue was up by 24%, to $311 million, during this period compared with last year, and Lee’s was up by 105%, to $176 million.

The company’s stock price soared more than 165% over the past year.

“We’re just building better products that people are paying more for and buying more of,” Baxter said. He said Wrangler gained traction in digital and international sales, developed a better product that could sell for a higher price across multiple categories, and cleaned up its sales channels in order to boost revenue.

Kontoor is now expanding beyond jeans to sell more outdoor gear, T-shirts and workwear to keep up with adapting consumer preferences, Baxter said.

“We did a survey of a bunch of our consumers and found that 84% of the people are going to upgrade their wardrobe, and a lot of that is going to be in the casual sector,” Baxter said. “Denim is going to actually be a big winner there, but so will T-shirts and some more different apparel likings from a casual standpoint … we’re positioned really, really well with that casualization globally.”

Though supply chains have been squeezed amid the pandemic, Kontoor has struggled less than most in the apparel industry because it owns its own manufacturing plants in Mexico and Nicaragua, Baxter said. 

“It was a strategic option” made during the company’s spinoff from VF Corporation in 2019, he said, that ultimately helped during the pandemic.

“We’re doing the best that we can to meet the demand in addition to the fact that there is increased demand and also in addition to the fact that our brands are really amplifying right now,” Baxter said.

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