Kontoor Brands, Inc. · NYSE:KTB
Kontoor Brands — Investor Day (May 2021)
171 slides from Kontoor Brands's investor day presentation, May 24, 2021
Slide 1: Investor Day
KONTOOR] INVESTOR DAY MAY 24, 2021
Slide 2: Eric Tracy
ERIC TRACY SENIOR DIRECTOR I N V E S TO R R E L AT I O N S
Slide 3: Catalyzing Growth
KTB INVESTOR DAY 2021 CATALYZING GROWTH
Slide 4: Disclosure
DISCLOSURE Forward-Looking Statements Certain statements included in this presentation are "forward-looking statements" within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectati
Slide 5: Agenda
AGENDA C ATA LY Z I N G G R O W T H • STRATEGIC VISION • Global Kontoor • Global Wrangler, Global Lee • GROWTH CATALYSTS • Enhance/Accelerate the Core (U.S. Wholesale) • Category (Outdoor/ATG, Work, Tees) • Geographic (China) • Channel (Digital) • GROWTH ENABLERS • Product/Design • Innovation/Sustai
Slide 6: Scott Baxter
SCOTT BAXTER PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 7: Next Years Catalyzing Growth
NEXT 3 YEARS CATALYZING GROWTH
Slide 8: KTB Strategic Vision
KTB STRATEGIC VISION C ATA LY Z I N G G R O W T H ACCELERATING INCREASING FUNDAMENTAL CASH FLOW ALGORITHM OPTIONALITY ENHANCED TARGETED TSR
Slide 9: KTB Strategic Vision: Actions Since Spin
KTB STRATEGIC VISION H O R I Z O N 1 : S T R AT E G I C A C T I O N S S I N C E S P I N W H AT W E S A I D W H AT W E D E L I V E R E D May Spin 2019 Accretive restructuring & quality-of-sales actions, $25M+ cost Fundamental Fundamental Optimization saves, and NA & APAC ERP implementations stabiliza
Slide 10: KTB Strategic Vision: Sequencing Matters
KTB STRATEGIC VISION S E Q U E N C I N G M AT T E R S DRIVE LONG-TERM ACCELERATION TSR DRIVERS Cash Flow OPTIMIZE Optionality, / INVEST Revenue and Margin Growth STABILIZE Dividend, / OPTIMIZE De-leverage of Balance Sheet and Margin Driven Dividend Driven At Spin FY20 FY21 FY22-FY23 TIME HORIZON "HO
Slide 11: KTB Strategic Vision: Growth Catalysts
KTB STRATEGIC VISION H O R I Z O N 2 : G R O W T H C ATA LY S T S REVENUE GROWTH VECTORS OF LONG -TERM KTB INVESTMENT THESIS E N H A N C E / A C C E L E R AT E T H E C O R E ( F O C U S O N U . S . W H O L E S A L E ) C AT E G O R Y E X T E N S I O N S ( F O C U S O N O U T D O O R , T E E S , W O R
Slide 12: KTB Strategic Vision: Growth Enablers
KTB STRATEGIC VISION HORIZON 2: GROWTH ENABLERS INVESTING IN TSR / GROWTH ENABLERS… PRODUCT & DESIGN Superior Product | Enhanced Global Designs Driving Premiumization & Elevated Price I N N O VAT I O N & S U S TA I N A B I L I T Y Product | Manufacturing | Sustainability/ESG S U P P LY C H A I N Own
Slide 13: Increasing Cash Flow Optionality
KTB STRATEGIC VISION HORIZON 2: INCREASING CASH FLOW OPTIONALITY OPTIMIZED OPPORTUNITY FOR TSR-BOLSTERING CAPITAL CAPITAL ALLOCATION STRUCTURE ACTIONS
Slide 14: Evolving TSR Algorithm
KTB STRATEGIC VISION E V O LV I N G T S R 1 A L G O R I T H M Previous TSR Target Actual TSR %2 New TSR Target 33% 15%+ 8 – 10% 1 TSR on an annual average basis 2 Total Shareholder Return assumes re-invested dividends; May 9, 2019 – May 6, 2021; Source: Bloomberg
Slide 15: Strategic Vision: Global Wrangler, Global Lee
STRATEGIC VISION GLOBAL WRANGLER GLOBAL LEE
Slide 16: Tom Waldron
TOM WALDRON EXECUTIVE VICE PRESIDENT AND G L O B A L B R A N D P R E S I D E N T, W R A N G L E R
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Slide 18: Wrangler: Setting the Foundation
WRANGLER H O R I Z O N 1 : S E T T I N G T H E F O U N D AT I O N BEGIN INVESTING IN KEY GROWTH ENABLERS ELEVATED PRODUCT WORLD CLASS TALENT AMPLIFIED DEMAND CREATION INNOVATION IN ALL WE DO
Slide 19: Wrangler: Diversified Growth
WRANGLER HORIZON 2: DIVERSIFIED GROWTH R E V E N U E G R O W T H C ATA LY S T S O F W R A N G L E R B U S I N E S S E N H A N C E / A C C E L E R AT E T H E C O R E Focus on U.S. Wholesale C H A N N E L D I V E R S I F I C AT I O N Focus on Digital G E O G R A P H I C E X PA N S I O N Focus on China
Slide 20: Wrangler 3-Year Targets
WRANGLER 3 - Y E A R TA R G E T S 3-Year Targets (2020 – 2023E) Billions (USD$) Revenue 1.8 $1.7B HSD% 3-Year CAGR 1.6 Adding ~$300M Incremental Revenue 1.4 $1.4B Geographic Expansion 1.2 Focus on Significant White Space in China 1.0 Channel Expansion 0.8 Leverage Innovation Platforms, ATG and Digit
Slide 21: Chris Waldeck
CHRIS WALDECK EXECUTIVE VICE PRESIDENT AND G L O B A L B R A N D P R E S I D E N T, L E E
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Slide 23: Lee: Setting the Foundation
LEE H O R I Z O N 1 : S E T T I N G T H E F O U N D AT I O N S I G N I F I C A N T B R A N D T R A N S F O R M AT I O N QUALITY OF SALES D E S I G N , I N N O VAT I O N A N D P R O D U C T D E V E L O P M E N T S U S TA I N A B I L I T Y D E M A N D C R E AT I O N
Slide 24: Lee: Brand Enhancing Growth
LEE HORIZON 2: BRAND ENHANCING GROWTH R E V E N U E G R O W T H C ATA LY S T S O F L E E B U S I N E S S E N H A N C E / A C C E L E R AT E T H E C O R E Focus on U.S. Wholesale C H A N N E L D I V E R S I F I C AT I O N Focus on Digital G E O G R A P H I C E X PA N S I O N Focus on China C AT E G O
Slide 25: Lee 3-Year Targets
LEE 3 - Y E A R TA R G E T S 3-Year Targets (2020 – 2023E) Billions (USD$) Revenue 1.2 $1.0B Low-Teens% 3-Year CAGR 1.0 Adding >$300M Incremental Revenue 0.8 Geographic Expansion $0.7B Focus on Tier 3 and Tier 4 China Markets 0.6 Channel Expansion Significant Opportunity in Premium/Value and Digital
Slide 26: Growth Catalysts
GROWTH CATALYSTS ENHANCE C AT E G O R Y GEOGRAPHIC CHANNEL THE CORE GROWTH E X PA N S I O N GROWTH
Slide 27: Growth Catalysts: Enhance the Core
GROWTH CATALYSTS ENHANCE THE CORE
Slide 28: Bill Lynch
BILL LYNCH V I C E P R E S I D E N T, U . S . G E N E R A L M A N A G E R LEE
Slide 29: Lee U.S. Wholesale: Areas of Focus
LEE U.S. WHOLESALE AREAS OF FOCUS RE-ESTABLISH HEALTHIER LONG-TERM FOUNDATION GROW MARKET SHARE IN EXISTING DISTRIBUTION NEW BUSINESS DEVELOPMENT
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Slide 31: Re-Establishing Healthier Foundation
RE-ESTABLISHING HEALTHIER FOUNDATION OPTIMIZING DOMESTIC BRAND POSITION STABILIZE ACCELERATE • Take share in existing channels • Significant investment • Improve profitability • Collaborations • Category extensions • Premiumization of the brand • Leverage innovation platforms
Slide 32: Re-Establishing Healthier Foundation: Quality of Sales
RE-ESTABLISHING HEALTHIER FOUNDATION QUALITY OF SALES CONSECUTIVE QUARTERS OF U.S. GROSS MARGIN EXPANSION 1 1 Year-over-year on an Adjusted basis
Slide 33: Grow Share in Existing Distribution
GROW SHARE IN EXISTING DISTRIBUTION A C C E L E R AT E U . S . W H O L E S A L E C O R E STRONG I N N O VAT I O N D E M A N D C R E AT I O N Drive New Consumer Acquisition via Scaling Investment in Retailer.com Omni-Channel with Digital Focus Brand Elevation at Retail C AT E G O R Y E X T E N S I O
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Slide 35: New Business Development
NEW BUSINESS DEVELOPMENT S I G N I F I C A N T O P P O R T U N I T Y I N E L E VAT E D C H A N N E L S P E N E T R AT E A C C E L E R AT E D I G I TA L PREMIUM CHANNEL NEW CHANNELS WHOLESALE BRAND HALO PINNACLE ~70% INCREASE IN SPECIALTY DIGITAL WHOLESALE 1 PREMIUM ~70% INCREASE IN CLUBS DIGITAL MAR
Slide 36: Jenni Broyles
JENNI BROYLES V I C E P R E S I D E N T, U . S . G E N E R A L M A N A G E R WRANGLER
Slide 37: Accelerate Core U.S. Wholesale
ACCELERATE CORE U.S. WHOLESALE WRANGLER BRAND WELL-POSITIONED CLEAR PRODUCT LEVERAGING UNIQUE DIVERSE ARCHITECTURE WINNERS POSITIONING PORTFOLIO 1 FREE DENIM & Adventurous & NON-DENIM LONGS 2 Optimistic SHORTS 3 STRONG WOVENS Tenacious & Confident 4 KNITS TRUE 5 Rooted & Soulful JACKETS
Slide 38: Accelerate Core U.S. Wholesale: Opportunity
ACCELERATE CORE U.S. WHOLESALE O P P O R T U N I T Y T O G A I N S H A R E & A D D I N C R E M E N TA L G R O W T H GAIN SHARE IN EXISTING NEW BUSINESS DISTRIBUTION DEVELOPMENT New investments in growth enablers drive accelerated top-line growth CHANNEL CATEGORY DIVERSIFICATION EXTENSIONS
Slide 39: Take Share in Existing Distribution
ACCELERATE CORE U.S. WHOLESALE TA K E S H A R E I N E X I S T I N G D I S T R I B U T I O N CONTINUOUS STRONG BEST IN CLASS I N N O VAT I O N D E M A N D C R E AT I O N S U P P LY C H A I N ATG BY ACQUIRING NEW WRANGLER SPEED CUSTOMERS ELEVATING ACROSS SCALE RETAILERS WRANGLER WORKWEAR DIGITAL -DRIV
Slide 40: New Business Development
ACCELERATE CORE U.S. WHOLESALE NEW BUSINESS DEVELOPMENT P E N E T R AT E A C C E L E R AT E D I G I TA L PREMIUM CHANNEL NEW CHANNELS WHOLESALE BRAND HALO PREMIUM ~60% INCREASE IN DIGITAL WHOLESALE 1 SPECIALTY ~50% INCREASE IN SPORTING GOODS DIGITAL MARKETING 2 CLUBS 1 Q1 2021 vs Q1 2020 Wrangler No
Slide 41: Category Extensions
ACCELERATE CORE U.S. WHOLESALE C AT E G O R Y E X T E N S I O N S A C C E L E R A T E C O M P L E M E N TA R Y C A T E G O R I E S T O C O R E D E N I M B O T T O M S WOVENS TEES JACKETS G R O W F A S T E R I N N E W C A T E G O R I E S W H E R E W R A N G L E R H A S P E R M I S S I O N T O P L AY
Slide 42: Channel Diversification
ACCELERATE CORE U.S. WHOLESALE C H A N N E L D I V E R S I F I C AT I O N M A I N TA I N A N D G R O W S H A R E I N C O R E • Mass • Western Specialty DISTORT GROWTH IN NEW DISTRIBUTION • Premium • Specialty • Sporting Goods • Digital
Slide 43: Leading Market Share
ACCELERATE CORE U.S. WHOLESALE LEADING MARKET SHARE COMBINED TOP MARKET SHARE MEN’S DENIM MEN’S CASUAL PANTS MEN’S WOVEN SHIRTS MEN’S CASUAL SHORTS Source: Source: The NPD Group, Consumer Tracking Service, Wrangler U.S. Unit Share, Men’s: Jeans/Casual Pants/Casual Shorts/Woven Shirts combined, 12ME
Slide 44: U.S. Wholesale Market Share Shows Momentum
ACCELERATE CORE U.S. WHOLESALE U.S. WHOLESALE MARKET SHARE1 SHOWS MOMENTUM AND IT’S WORKING 19% 18% 17% Q3’20 Q4’20 Q1’21 1 Source: The NPD Group, Retail Tracking Service, Wrangler/Rustler/Riggs Workwear by Wrangler combined U.S. Dollar Share, Men’s: Jeans/Casual Pants combined, 9ME March 2021
Slide 45: Accelerate the Core: 3-Year Targets
ACCELERATE THE CORE 3 - Y E A R TA R G E T S 3-Year Targets (2020 – 2023E) KONTOOR U.S. WHOLESALE % OF REVENUE 2021 +HSD- 68% GROWTH +LDD% 63% 2022/2023 +LSD% CAGR 2020 2023E
Slide 46: Growth Catalysts: Category Extensions
GROWTH CATALYSTS C AT E G O R Y E X T E N S I O N S
Slide 47: Jimmy Shafer
JIMMY SHAFER VICE PRESIDENT & GENERAL MANAGER TRADITIONAL & OUTDOOR
Slide 48: Category Extensions
CATEGORY EXTENSIONS OUTDOOR WORK TEES
Slide 49: Category Opportunity
CATEGORY OPPORTUNITY OUTDOOR1 WORK2 TEES3 ~$30B ~$15B ~$100B ADDRESSABLE MARKET ~$145B 1. WWD May 2021; 2025 expected global market 2. Workwear Report and KTB market analysis, 2021 3. Statista, 2021
Slide 50: Category Growth
CATEGORY GROWTH OUTDOOR WORK TEES
Slide 51: Outdoor: Category Growth Drivers
OUTDOOR C AT E G O R Y G R O W T H D R I V E R S BUILD BRAND EXTEND PRODUCT SCALE PRODUCT AWA R E N E S S PORTFOLIO DISTRIBUTION I N N O VAT I O N ADDRESSABLE MARKET1 : ~$30B 1. WWD May 2021; 2025 expected global market
Slide 52: Women's Slide
WOMEN’S SLIDE
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Slide 54: Workwear: Category Growth Drivers
WORKWEAR C AT E G O R Y G R O W T H D R I V E R S PRODUCT PRODUCT B2B / INDUSTRIAL S E G M E N TAT I O N I N N O VAT I O N ADDRESSABLE MARKET1 : ~$15B 1. Workwear Report and KTB market analysis, 2021
Slide 55: Tees: Category Growth Drivers
TEES C AT E G O R Y G R O W T H D R I V E R S LICENSED IP + LOGO LIFESTYLE GRAPHICS COLLABS Halo Brand Marketing Emotional Connection Established Market Value Builds Brand Fandom Purpose-Led Messaging Style Guide Creative Limited Creative Risk Self Expression / Individuality Shared Marketing ADDRESS
Slide 56: Category Growth: 3-Year Targets
CATEGORY GROWTH 3 - Y E A R TA R G E T S 3-Year Targets (2020 – 2023E) 450 15% of Millions (USD$) Revenue 400 Double Revenue in 3 Years 350 Adding >$200M Incremental Revenue 300 250 ~15% Penetration 9% of From 9% in 2020 200 Revenue 150 Gross Margin Improvement ~30% CAGR 100 Over Time 50 0 2020 2023
Slide 57: Growth Catalysts: Geographic Expansion
GROWTH CATALYSTS G E O G R A P H I C E X PA N S I O N
Slide 58: John Gearing and Christy Kilmartin
JOHN GEARING VICE PRESIDENT & MANAGING DIRECTOR A S I A PA C I F I C CHRISTY KILMARTIN VICE PRESIDENT MARKETING & MERCHANDISING A S I A PA C I F I C
Slide 59: China Strategic Vision
JOHN GEARING VICE PRESIDENT & MANAGING DIRECTOR A S I A PA C I F I C CHINA STRATEGIC VISION
Slide 60: Geographic Expansion: China Opportunity Significant
GEOGRAPHIC EXPANSION CHINA OPPORTUNITY SIGNIFICANT Pre-Spin Post-Spin (2019-2021) All Channels Shrinking; Unsustainable Return to Profitable Growth • Non-expert leadership • Channel expert leadership • 3rd party operator vacancy • 3rd party operator acting as internal function E-Comm • Less connecti
Slide 61: Geographic Expansion: Return to Growth
GEOGRAPHIC EXPANSION RETURN TO GROWTH Pre-Spin Post-Spin Before COVID COVID Impacted Return to Growth Challenging for all channels All channels delivered positive Heavily impacted by COVID in Q1; All channels return comps in Q3 & Q4 Quickly recovered in Q2 & Q3. to growth e-Comm delivered high doubl
Slide 62: China Strategic Focus
CHINA STRATEGIC FOCUS 1 D I G I TA L F O C U S STRENGTHEN LEADING POSITION IN CHINA 2 D T C E X PA N S I O N WHOLESALE RETURN TO 3 GROWTH 4 WRANGLER LAUNCH & BUILD LAUNCH IN ’21 BUILD IN ’22 5 D E M A N D C R E AT I O N A C C E L E R AT E I N ’ 2 3
Slide 63: China Go-To-Market Strategy
CHRISTY KILMARTIN VICE PRESIDENT MARKETING & MERCHANDISING A S I A PA C I F I C CHINA GO-TO-MARKET STRATEGY
Slide 64: Lee in China Today
LEE IN CHINA TODAY F U L L VA L U E PREMIUM LEADING JEANSWEAR #1 LIVE- CHAIN R E TA I L PREMIUM DENIM C AT E G O R Y STREAM OWNERSHIP FOOTPRINT BRAND C A P TA I N PA R T N E R VERTICAL ~670 DOORS ACCELERATED HIGH STATUS BRAND VALIDATION INTEGRATION GROWTH Think like a consumer, World-class branded r
Slide 65: Kontoor
ONTOOR]
Slide 66: China Premium Positioning
CHINA PREMIUM POSITIONING B U I LT O N 6 K E Y I N V E S T M E N T S LOCALISED I N N O VAT I O N COLLABS INSIGHTS & SPEED TO W E G E T PA I D WITH GLOBAL LEGENDARY CONTENT CONSUMER FOR CELEBRITIES BRANDS R E TA I L China for China Fast Calendars Elevated Style Build Trust Drive Traffic Premium Brand
Slide 67: China: Lee Marketing
China: Lee Marketing VIEWS 340M TMALL UV 6.6M TMALL FA N S 100K SOCIAL FA N S 139K
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Slide 70: Art Inspires Lee
ART INSPIRES LIFE INSPIRES LEE
Slide 71: Legendary Retail
LEGENDARY RETAIL
Slide 72: Raza
RAZA Wrangler
Slide 73: The Wrangler Story... So Far
B-Roll/Images THE WRANGLER STORY… SO FAR INNERSECT TMALL #1 YOUTH EXPO FLAGSHIP LIVESTREAMER
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Slide 75: Scaling Momentum
SCALING MOMENTUM IN 2021 AND BEYOND LIVESTREAM MEDIA SEEDING BRAND SHOWCASE STORES
Slide 76: China: 3-Year Targets
CHINA 3 - Y E A R TA R G E T S 3-Year Targets (2020 – 2023E) Millions (USD$) 300 10% of Sales 250 ~25% 3-Year CAGR >30% Growth Expected in 2021 200 2X Revenue In 3 Years Adding ~$150M Incremental Revenue $ 150 <7% of Sales 10% Penetration In 3 Years 100 ~25% From Under 7% in 2020 CAGR Gross Margin A
Slide 77: Growth Catalysts: Channel Expansion
GROWTH CATALYSTS C H A N N E L E X PA N S I O N
Slide 78: Chris Reid
CHRIS REID VICE PRESIDENT G L O B A L D I G I TA L
Slide 79: Digital Strategic Vision
DIGITAL STRATEGIC VISION AREAS OF FOCUS DIGITAL EVOLUTION SIGNIFICANT GROWTH OPPORTUNITIES DEMONSTRATING HIGH RETURN ON INVESTMENT 3-YEAR FINANCIAL TARGETS
Slide 80: Digital Strategy Poised for Amplified Growth
DIGITAL STRATEGY POISED FOR AMPLIFIED GROWTH C O N S U M E R R E V O L U T I O N H A S A C C E L E R AT E D MORE MORE MORE MORE MORE MORE KNOWLEDGEABLE DEMANDING EMPOWERED C O L L A B O R AT I V E INTERACTIVE MOBILE WE ARE MAKING SIGNIFICANT INVESTMENTS IN DIGITAL GROWTH OPPORTUNITY
Slide 81: Digital Ecosystem
DIGITAL ECOSYSTEM TA K I N G A H O L I S T I C A P P R O A C H CONTENT Email Site/Ads Influencer Collab Blog PR Events Video SEARCH “Know Me” “Acknowledge Me” ONLINE STORES SOCIAL “Appreciate Me” SHOPPING Own.com Brick & Mortar Social Media Digital Wholesale Wholesale Partners Commerce SOCIAL MEDIA
Slide 82: Digital Strategic Vision
DIGITAL STRATEGIC VISION I M M E R S I V E P L AT F O R M D R I V E S E N G A G E M E N T Maximize consumer spend by creating ON-BRAND, CHANNEL-RELEVANT DIGITAL EXPERIENCES of our Wrangler & Lee brands so more people love to engage with our brands and buy our products CONSUMER DATA DYNAMIC & SEAMLES
Slide 83: Owned Digital Penetration Opportunity
OWNED DIGITAL PENETRATION OPPORTUNITY U N D E R P E N E T R AT E D R E L AT I V E T O P E E R S E T >20% D I G I TA L P E N E T R AT I O N I N C R E A S E D TO 5% OF REVENUE IN FY’20 5% Benchmark1 Global KTB 1 Based on KTB market analysis of select peer set; FY’20
Slide 84: Kontoor's Digital Evolution
KONTOOR’S DIGITAL EVOLUTION H O R I Z O N 1 F O U N D AT I O N → H O R I Z O N 2 A C C E L E R AT E D GROWTH Leading Ecommerce Compelling Content Personalization Seamless Ecosystem Platform Digital Talent Mobile Commerce Social Commerce Advanced Analytics Digital Demand Data & Analytics CRM
Slide 85: Transactional to Experiential
TRANSACTIONAL TO EXPERIENTIAL PINNACLE BRAND EXPRESSION
Slide 86: Seamless Experience
SEAMLESS EXPERIENCE REMOVING FRICTION DRIVES INCREASED CONVERSION
Slide 87: Authentic Brand Experiences
AUTHENTIC BRAND EXPERIENCES INVESTMENTS SUPPORT BRAND-ENHANCING GROWTH
Slide 88: Digital Strategy Already Working
DIGITAL STRATEGY ALREADY WORKING STRONG RETURNS ON AMPLIFIED INVESTMENTS GLOBAL OWNED ECOMMERCE REVENUE GROWTH1 58% 33% 18% 1% Q1 2020 H1 2020 H2 2020 Q1 2021 1 Constant currency basis
Slide 89: Digital: 3-Year Targets
DIGITAL 3 - Y E A R TA R G E T S Revenue 3-Year Targets (2020 – 2023E) 300 10% of Millions (USD$) Revenue ~40% 3-Year CAGR Back-End Weighted 250 200 2.5X Revenue in 3 Years Adding >$150M Incremental Revenue 150 5% of 2X Penetration in 3 Years Revenue From 5% in 2020 to 10% in 2023 100 ~40% CAGR Gros
Slide 90: Growth Enablers
GROWTH ENABLERS PRODUCT & I N N O VAT I O N & TA L E N T & DEMAND S U P P LY C H A I N DESIGN S U S TA I N A B I L I T Y C U LT U R E C R E AT I O N
Slide 91: Growth Enablers: Product Design & Development
GROWTH ENABLERS PRODUCT DESIGN & DEVELOPMENT
Slide 92: Betty Madden
BETTY MADDEN VICE PRESIDENT GLOBAL DESIGN, LEE
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Slide 96: Heritage Characteristics
CHAR ENG } HERITAGE CHARACTERISTICS 1 1 aS : RAFTED
Slide 97: Slide 97
Slide 98: Vivian Rivetti
VIVIAN RIVETTI VICE PRESIDENT GLOBAL DESIGN, WRANGLER
Slide 99: Slide 99
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Slide 102: Four Way Dimensional Stretch
FOUR WAY DIMENSIONAL STRETCH
Slide 103: Slide 103
Slide 104: Color & Mood
COLOR & MOOD ALL TERRAIN GEAR a Wrangier =>
Slide 105: Growth Enablers: Innovation & Sustainability
GROWTH ENABLERS I N N O VAT I O N & S U S TA I N A B I L I T Y
Slide 106: Jeff Frye
JEFF FRYE VICE PRESIDENT P R O D U C T D E V E L O P M E N T, I N N O VAT I O N , S U S TA I N A B I L I T Y A N D P R O C U R E M E N T
Slide 107: Kontoor Innovation: Areas of Focus
KONTOOR INNOVATION AREAS OF FOCUS SUSTAINABILITY IN ALL WE DO COMFORT, FIT & PERFORMANCE NEXT-GENERATION TECHNOLOGIES MANUFACTURING REVOLUTION
Slide 108: Kontoor Innovation: Sustainability
KONTOOR INNOVATION S U S TA I N A B I L I T Y PEOPLE, PRODUCT & MEASURE TO IMPROVING OUR PLANET MANAGE BASE LINE DYNAMIC PROCESS OF CONTINUAL IMPROVEMENT
Slide 109: Kontoor Innovation: Comfort, Performance & Fit
KONTOOR INNOVATION C O M F O R T, P E R F O R M A N C E & F I T CONSUMERS SEARCHING FOR CLOTHING THAT IS COMFORTABLE & STYLISH KONTOOR-LED INNOVATIONS COMBINE BEST OF BOTH WORLDS IDEAL FIT, ALL-DAY COMFORT AND FLATTERING
Slide 110: Kontoor Innovation: Next-Generation Technologies
KONTOOR INNOVATION N E X T- G E N E R AT I O N T E C H N O L O G I E S CONSUMER IS TECHNOLOGY-FOCUSED, DATA DRIVEN & AWARE LEVERAGING BREAKTHROUGH SCIENTIFIC RESEARCH LIFESTYLE FUNCTIONAL PERFORMANCE ENHANCING
Slide 111: Sustainable Innovation Development & Manufacturing
KONTOOR INNOVATION DEVEL O PM ENT AND M ANUFACTURI NG REVO L UTI O N SUSTAINABLE INNOVATION DEVELOPMENT & MANUFACTURING
Slide 112: Kontoor Innovation
KONTOOR| INNOVATIO KONTOOR]
Slide 113: Growth Enablers: Supply Chain
GROWTH ENABLERS S U P P LY C H A I N
Slide 114: Karen Smith
KAREN SMITH EXECUTIVE VICE PRESIDENT G L O B A L S U P P LY C H A I N
Slide 115: Supply Chain: Areas of Focus
SUPPLY CHAIN AREAS OF FOCUS OWNED MANUFACTURING FUELS COMPETITIVE ADVANTAGE IMPROVED SERVICE AND AGILITY ERP & TECHNOLOGY-DRIVEN PRODUCTIVITY GAINS
Slide 116: Highly Diversified Global Manufacturing Base
SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE H I G H LY D I V E R S I F I E D G L O B A L M A N U FA C T U R I N G B A S E Scale, Speed to Market, Reduced Lead Times, Improved Flexibility Monterey MEXICO Torreón Coyote Top 5 Countries = ~85% of La Rosita San Pedro Production Sewing Plant Support Departme
Slide 117: Supply Chain Evolution: Owned Manufacturing
SUPPLY CHAIN EVOLUTION O W N E D M A N U FA C T U R I N G A S A C O M P E T I T I V E A D VA N TA G E INNOVATION SPEED & FLEXIBILITY TECHNOLOGY EFFICIENCY MARGIN ENHANCEMENTS
Slide 118: Vertically Integrated Production = Speed at Scale
SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE V E R T I C A L LY I N T E G R AT E D P R O D U C T I O N = S P E E D AT S C A L E LEADING THE MANUFACTURING REVOLUTION AT SCALE LESS Compared to 20 Weeks Sourced THAN Weeks 1 1. Kontoor denim jackets produced internally compared with those sourced in Asia
Slide 119: Advanced Technologies: Recycled Water
SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE A D VA N C E D T E C H N O L O G I E S LEADING THE MANUFACTURING REVOLUTION AT SCALE Save 10B % Liters by Recycled H20 1 2025 1. Enzyme washing process utilized in Torreon facility
Slide 120: Advanced Technologies: Laser Finishing
SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE A D VA N C E D T E C H N O L O G I E S LEADING THE MANUFACTURING REVOLUTION AT SCALE % Laser 1 Finishing Faster 1. Relative to traditional finishing techniques
Slide 121: Sourcing Footprint
SOURCING FOOTPRINT IMPROVING LEVERAGE OPTIMIZE Countries Factories Mills • Drive Efficiencies • Consolidate Factories • Build More Vertical Supply 2019 2020 2021E 2022E • Smartly Grow in Selective Number of Countries Number of Factories Markets
Slide 122: Responsible Sourcing
RESPONSIBLE SOURCING PILLARS OF WORK WORKER & WORKER RIGHTS PRODUCT E N V I R O N M E N TA L COMMUNITY & SAFETY S T E WA R D S H I P S U S TA I N A B I L I T Y DEVELOPMENT DOING THE RIGHT THING, EVEN WHEN IT’S HARD
Slide 123: Supply Chain Evolution: Global ERP and Planning Tools
SUPPLY CHAIN EVOLUTION GLOBAL ERP AND PLANNING TOOLS N E W E R P P L AT F O R M = S I N G L E S O U R C E O F C L E A N , G L O B A L D ATA DRIVE PRODUCTIVITY AND REDUCE COMPLEXITY Faster Decisions on SKU and Material Rationalization NEW PLANNING TECHNOLOGY = CONTINUED FOCUS ON 20% TARGETED SKU Q U
Slide 124: Supply Chain Evolution: Inventory
SUPPLY CHAIN EVOLUTION GLOBAL ERP AND PLANNING TOOLS Owned Improved Sourced Demand INVENTORY Signals ERP & Technology
Slide 125: Supply Chain as a Competitive Advantage
SUPPLY CHAIN EVOLUTION G L O B A L T R A N S F O R M AT I O N SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE
Slide 126: Growth Enablers: Talent & Culture
GROWTH ENABLERS TA L E N T & C U LT U R E
Slide 127: Jen Molinaro
JEN MOLINARO VICE PRESIDENT G L O B A L TA L E N T
Slide 128: We Are Kontoor: Purpose, Mission, Values
WE ARE KONTOOR P U R P O S E , M I S S I O N , VA L U E S PURPOSE W E A R E T H E C O M M O N T H R E A D T H AT I N S P I R E S P E O P L E Why we exist T O L I V E W I T H PA S S I O N A N D C O N F I D E N C E MISSION WE GROW OUR ICONIC BRANDS THROUGH INNOVATION, DESIGN, AND What we do SUSTAINABL
Slide 129: We Are Kontoor: Culture Drives Success
WE ARE KONTOOR C U LT U R E D R I V E S S U C C E S S ENGAGEMENT FAVORABILITY 1 1 Kontoor Brands 2020 Employee Engagement Survey; Respondents favorability to: Intent to Stay is High, Pride in Company, Recommend Kontoor Brands, and Sense of Personal Accomplishment
Slide 130: Strategic Pillars of Inclusion & Diversity
WE ARE KONTOOR S T R AT E G I C P I L L A R S O F I N C L U S I O N & D I V E R S I T Y WORKPLACE WORKFORCE MARKETPLACE S U S TA I N A B I L I T Y & BELONGING DIVERSITY EQUITY A C C O U N TA B I L I T Y Foster a culture of inclusion Recruit, retain and promote Drive inclusion & diversity Identify an
Slide 131: Cultivating a Growth Culture
WE ARE KONTOOR C U LT I VAT I N G A G R O W T H C U LT U R E HORIZON 1 HORIZON 2 • Performance Mindset • Growth Mindset • Optimization • Transformation • Leveraging • Empowering • Responsive • Proactive • Operational • Strategic TAKE CARE OF EACH OTHER
Slide 132: Growth Enablers: Demand Creation
GROWTH ENABLERS D E M A N D C R E AT I O N
Slide 133: Holly Wheeler
HOLLY WHEELER VICE PRESIDENT GLOBAL MARKETING, WRANGLER
Slide 134: Wrangler Creative Vision
WRANGLER CREATIVE VISION _ HERITAGE. EASHED
Slide 135: Cowboy Cool
COWBOY COOL We’re inspired by their courage, independent spirit and rugged sense of adventure. “Cowboy Cool” is a timeliness uniform that is confident, effortless and unapologetically free.
Slide 136: Wrangler
Wrangler
Slide 137: Independence, Courage, Integrity, Confidence
INDEPENDENCE [ COURAGE ] INTEGRITY CONFIDENCE
Slide 138: -n
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Slide 139: Turn Heads. Capture Hearts.
we le Wrangler = Hp TURN HEADS. ia 4 CAPTURE HEARTS. \ Bae ‘THE FOLLOWING PREVIEW HAS BEEN APPROVED To ACCOMPANY THIS FEATURE PR amnesia eee
Slide 140: 75th Anniversary
TH 75 ANNIVERSARY Limited Edition Documentary Film & Music Iconic Custom Product Archives Revival Partnerships Collaborations Experiences
Slide 141: Brigid Stevens
BRIGID STEVENS SENIOR DIRECTOR MARKETING, LEE
Slide 142: Slide 142
Slide 143: Slide 143
Slide 144: Legendary
LEGENDARY LOOKS GOOD ON YOU |Chris Stapleton’s Starting Over’ Isa Forward-Looking Throwback Miranda Lambert Makes 3 Memorable Outfit Changes During the 2021 ACM Awards
Slide 145: Slide 145
Slide 146: Slide 146
Slide 147: Stand Tall
STAND TALL
Slide 148: Financial Strategy 2020-2023E
FINANCIAL STRATEGY 2020 – 2023E
Slide 149: Rustin Welton
RUSTIN WELTON EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Slide 150: Horizon 1: Strategic Actions Since Spin
HORIZON 1 S T R AT E G I C A C T I O N S S I N C E S P I N W H AT W E S A I D W H AT W E D E L I V E R E D May Spin 2019 Accretive restructuring & quality-of-sales actions, $25M+ cost Fundamental Fundamental Optimization saves, and NA & APAC ERP implementations stabilization & optimization 40bps1 ex
Slide 151: Horizon 2: Catalyzing Growth
HORIZON 2 : CATALYZING GROWTH 2020 – 2023E 2020 ACTUAL 1 2021E 2 2022E/2023E 3,4 2023E TARGET REVENUE $2.1B +Low-Teens% +MSD% ~$2.7B GM 41.2% +230-270bps ~+100bps 46.0%+ OM 10.9% +275-300bps ~+50bps 15.0%+ EPS $2.61 40%+ 5 +Mid-Teens% $5.00+ CFO ~$1 Billion6 1 GM, OM and EPS on an Adjusted basis; Se
Slide 152: Revenues 2020-2023E
REVENUES 2020 – 2023E ~$2.7B +MSD% CAGR +Low- Teens% $2.1B ~$2.4B 2020 2021E1 2023E 1 Based on latest guidance provided on May 6, 2021
Slide 153: Revenues 2019-2021E
REVENUES 2019 – 2021E 2021 Expected Revenue Above $2.5B 2019 ex-Strategic Actions ~$2.4B1 $2.1B Guidance: +Low-Teens Growth1 2019 Actual Strategic Exits COVID & Other Digital & Business 2020 Actual Strategic Exits Core & COVID Digital & Business 2021E Development Recovery Development 1 Based on late
Slide 154: Revenues 2021E-2023E
REVENUES 2021E – 2023E Strategic Growth Drivers Contribute Majority of ~$2.7B Growth ~$2.4B1 +MSD Growth 2021E Core Channel Category Geographic 2023E 1 Based on latest guidance provided on May 6, 2021
Slide 155: Growth Drivers
GROWTH DRIVERS 2020 – 2023E % of Sales Growth / CAGR Growth Driver 2020 2023E 2021E 2022E / 2023E +HSD- CORE1 68% 63% +LSD% +LDD% GEOGRAPHIC2 22% 28% >25% +DD% China 7% China 10% China >30% China >20% CHANNEL3 5% 10% >35% >30% CATEGORY4 9% 15% +DD% +DD% 1 U.S. Wholesale 2 International 3 Own.com 4 G
Slide 156: Gross Margin
GROSS MARGIN 2020 – 2023E 43.5% ~+100bps Annual - Gross Margin 41.2% 43.9% Expansion 46.0%+ 20201 2021E2 2023E + Channel Mix – Input Cost Inflation + Geographic Mix – Freight + Supply Chain Initiatives + Restructuring & Quality of Sales + AUR Mix & Selective Price + SKU Rationalization 1 On an Adjus
Slide 157: SG&A
SG&A 2020 – 2023E DISTORTING SG&A DOLLARS TO HIGHER ROI / TSR ACCRETIVE INITIATIVES ERP / Phase 2 Saves1 Demand Creation (Efficiency Improvements) (Under-indexed relative to peers) Top-Line Leverage Digital (+GM Improvements) (Establish infrastructure and grow) Non-Strategic Spend International (Glo
Slide 158: Operating Margin
OPERATING MARGIN 2020 – 2023E 15.0%+ ~+50bps Annual +275- 300bps 10.9% 13.7-14.0% 20201 2021E2 2023E 1 On an Adjusted basis; See Appendix for reconciliation to nearest GAAP measure 2 Based on latest guidance provided on May 6, 2021
Slide 159: Earnings Per Share
EARNINGS PER SHARE 2020 – 2023E $5.00+ +Mid- Teens% CAGR 40%+ $2.61 $3.70-$3.80 20201 2021E2 2023E2 1 On an Adjusted basis; See Appendix for reconciliation to nearest GAAP measure 2 Based on latest guidance provided on May 6, 2021
Slide 160: Cash Flow Generation: Net Debt Reduction
CASH FLOW GENERATION SIGNIFICANT NET DEBT1 REDUCTION SINCE SPIN Net Debt $922 MILLION HORIZON 1 DE-LEVERAGE STRENGTHENS FOUNDATION FOR HORIZON 2 OPTIONALITY $587 MILLION SPIN Q1’21 1 Net debt defined as Total Debt less Cash
Slide 161: Targeted Cumulative Cash from Operations
CASH FLOW GENERATION 2021E – 2023E ~$1 BILLION 1 TARGETED CUMULATIVE CASH FROM OPERATIONS 1 2021E – 2023E cumulative
Slide 162: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY EVOLUTION TO OPTIONALITY CAPITAL STRUCTURE FLEXIBILITY SUPERIOR DIVIDEND Return excess cash to De-lever the balance sheet to shareholders consistent with provide flexibility. Targeting net long-term TSR leverage1 of 1.0x to 2.0x FUND STRATEGIC INITIATIVES HORIZON 1: FOUND
Slide 163: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY EVOLUTION TO OPTIONALITY CAPITAL STRUCTURE FLEXIBILITY SUPERIOR DIVIDEND Return excess cash to De-lever the balance sheet to shareholders consistent with provide flexibility. Targeting net long-term TSR leverage1 of 1.0x to 2.0x FUND STRATEGIC INITIATIVES STRATEGIC M&A SH
Slide 164: Capital Allocation: M&A Criteria
CAPITAL ALLOCATION M&A CRITERIA AUTHENTIC FIT CONSUMER & Brand and culture align with Kontoor ethos GROWTH FOCUSED Focus on consumer-led brands with existing or potential premium growth ACCRETIVE characteristics Visibility to immediate or near-term accretion and positive TSR contribution LEVERAGES K
Slide 165: Total Shareholder Return
TOTAL SHAREHOLDER RETURN I N C R E A S I N G F U N D A M E N TA L S D R I V E E V O LV I N G T S R 1 +LSD to MSD 15%+ +MSD +MSD to +HSD Margin Revenue Dividend Share M&A Multiple Total Expansion Growth Yield Repurchase Expansion Shareholder Return 1 Long-Term TSR Algorithm excluding 2021 Recovery
Slide 166: Financial Summary Targets
FINANCIAL SUMMARY 2 0 2 3 TA R G E T S REVENUE MARGINS EPS CFO1 TSR 46%+ GM ~$2.7B $5.00+ ~$1 Billion 15%+ 15%+ OM SUSTAINABLE HEALTHY ACCELERATING DURABLE & SHAREHOLDER GROWTH MARGIN PROFITABILITY CONSISTENT FOCUSED & EXPANSION & CASH FLOW INCREASING BRAND OPTIONALITY INVESTMENT 1 2021E – 2023E cum
Slide 167: Appendix
KONTOOR] APPENDIX
Slide 168: Reconciliation of Adjusted Financial Measures (Non-GAAP)
KONTOOR BRANDS, INC. Reconciliation of Adjusted Financial Measures (Non-GAAP) (Unaudited)
Slide 169: Reconciliation of Adjusted Financial Measures (Non-GAAP)
KONTOOR BRANDS, INC. Reconciliation of Adjusted Financial Measures (Non-GAAP) (Unaudited)
Slide 170: Reconciliation of Adjusted Financial Measures (Non-GAAP)
KONTOOR BRANDS, INC. Reconciliation of Adjusted Financial Measures (Non-GAAP) (Unaudited)
Slide 171: Reconciliation of Adjusted Financial Measures (Non-GAAP)
KONTOOR BRANDS, INC. Reconciliation of Adjusted Financial Measures (Non-GAAP) (Unaudited) Notes to Adjusted Financial Measures: Management uses the above non-GAAP financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. In additio