Wrangler’s Plans to Enter China Upended by the Virus Outbreak

(Bloomberg) -- Wrangler's big plan for 2020 was to start selling the 73-year-old denim brand in China. Now, thanks to the coronavirus outbreak, that's on hold.

Kontoor Brands Inc., which owns Wrangler and Lee, said on Thursday that the launch is now scheduled for the fall, after previously targeting the fast-growing market in February or March.

“We have made the decision to launch in the fall for all the obvious reasons,” Chief Executive Officer Scott Baxter said in an interview. “The stores have been closed, the consumer is not shopping and we're really just thinking through the advertising piece right now.”

The delay is another example of how the viral outbreak is upending companies' best-laid plans in all areas, from employee travel to company events and sales strategies. With new cases of Covid-19 cropping up from the U.S. to New Zealand, airlines are reducing flights and consumers are stocking up on food and health supplies in anticipation of a sustained disruption of daily activities.

In Kontoor's case, the apparel maker has had its eyes set on China for at least a year. Its Lee apparel line is already China's biggest denim brand, and after the company was spun off from VF Corp. last year, bringing Wrangler there was a major goal.

Another Obstacle

But the plans for the brand, which is closely tied to American country music, have run into a series of hurdles. In 2019, the uncertainty surrounding tariffs complicated things. Then came coronavirus, which has roiled life in China, keeping malls and shopping centers empty after emerging in Hubei province toward the end of last year.

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Kontoor, which reported quarterly earnings on Thursday, did not include the potential impact from coronavirus in its full-year outlook, but the company said in a press release that it is “carefully monitoring” the situation. Currently, China accounts for about 7% of the retailer's annual global revenue.

Wrangler's planned rollout included events for consumers and shows to highlight the brand. That's not happening now, Baxter said, but Kontoor is still working to build brand awareness through digital and social media advertising.

Baxter does see some positive signs taking place in its China stores. Over the last week, half of them have reopened and “the consumer is coming back really slowly,” he said.

“We've lurched from the tariffs to the coronavirus, we'll do our best to stay nimble but we really can't predict what's next,” Baxter said.

To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Cronin at acronin14@bloomberg.net, Jonathan Roeder

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