Kontoor Brands’ revenue for the third quarter decreased nine per cent year-over-year. It was a tough third quarter for the company, weighed down by US retail woes and global distribution problems. During the quarter, US revenue was down nine per cent on a reported basis and 6 per cent compared with 2018 adjusted revenues. International revenue was down 11 per cent on a reported basis. These were partially offset by growth in China and favorable timing of shipments in Europe.
Net income for the quarter dropped 80 per cent. Ebitda declined ten per cent on an adjusted basis. Adjusted ebitda margin decreased 50 basis points to 14.1 per cent. Gross margin increased 30 basis points to 40.1 per cent on a reported basis. On an adjusted basis, gross margin was up 20 basis points to 40.9 per cent. Increases were primarily due to the impacts of restructuring and quality-of-sales initiatives, as well as a favorable channel mix, which more than offset the negative impact of strategic actions taken in India and the pressure from foreign currency. Operating income was down 67 per cent.
The company continues to expect second-half revenue to improve relative to the first half of 2019, with the fourth quarter benefiting the most from strategic actions.