US consumers are pulling back as they face down layoffs and impending tariffs, according to the chief executive officer of the company that owns the Lee and Wrangler brands.
“The consumer right now is confused,” Kontoor Brands Inc. CEO Scott Baxter said during the company’s quarterly call with analysts. “If you just put yourself in their seat, they’re worried about work. They’re worried about the businesses that they’re in. Are those going to be impacted by some of the layoffs, the tariffs, the current situation right now?”
Kontoor shares sank as much as 16 percent on Tuesday, the most intraday since 2020, after the company gave a 2025 earnings outlook that fell short of analysts’ estimates. The stock had been largely flat this year through Monday’s close.
Baxter said consumers are wondering when they’ll “be able to get back to some sort of normalcy.”
“Any time the consumer is feeling a little bit under attack like that, they get very conservative,” he said. “And I think that we are in this country right now seeing that conservatism from the consumer because of their worry.”
His comments came right before the release of US consumer confidence data for February that fell by the most since August 2021. This added to concerns that the Trump administration’s policies is weighing on households.
Baxter added that Kontoor is working to expand through strategic initiatives — including the Helly Hansen outdoor apparel brand, which it recently said it would purchase for about $900 million. “As soon as we can get to some more predictable state, we should all be in a really good place,” he said.
President Donald Trump has moved rapidly to overhaul the US government since taking office by enacting sweeping cuts across the federal workforce while pledging tariffs on a wide range of goods and nations. The potential tariffs, and a lack of visibility on whether or not they’ll be ultimately implemented, have unnerved businesses.
Trump most recently said that 25 percent tariffs on Canada and Mexico, expected to take effect on March 4, are “on time” and “moving along very rapidly.”
Executives at Greensboro, North Carolina-based Kontoor said that about a quarter of the company’s expected US production volume this year will originate from Mexico.
Kontoor said that tariffs on Mexican products this year, if enacted in March, would erode operating profit by about $50 million before taking into account any actions taken to offset the impact. The company could transfer production elsewhere, raise prices or take “other proactive mitigating cost actions,” according to chief financial officer Joe Alkire.
These actions would be expected to lessen the impact, he added, and Kontoor expects to “offset any potential impact of tariffs more fully in 2026,” Alkire said.
By Lily Meier
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