Levi Strauss Q2 revenues increase, maintains full year outlook

Second quarter revenues at Levi Strauss of 1.4 billion dollars were 8 percent higher on a reported basis and 9 percent higher on a constant-currency basis.

However, adjusting for the shift in wholesale shipments and the exit of the Denizen business, the company's revenue would have been up 1 percent or 2 percent in constant currency.

Net income was 18 million dollars, while adjusted net income was 66 million dollars compared to 15 million dollars in the previous year. Diluted earnings per share were 4 cents and adjusted diluted earnings per share increased to 16 cents. Gross margin increased 180 basis points to 60.5 percent in the second quarter.

“We delivered another strong quarter driven by the Levi’s brand's prominence at the centre of culture, a robust pipeline of newness and innovation, and continued momentum in our global direct-to-consumer channel. Our amplified focus on women’s and denim lifestyle is delivering outsized growth and driving meaningful market share gains,” said Michelle Gass, president and CEO of Levi Strauss & Co.

Highlights of Levi Strauss results across core markets

In the Americas, net revenues for the quarter increased 17 percent on a reported basis and 16 percent on a constant-currency basis. Adjusting for the shift in wholesale shipments and the exit of the Denizen business, the Americas was up 3 percent and the US was up 2 percent.

In Europe, net revenues decreased 2 percent on a reported and constant-currency basis, reflecting a sequential improvement from Q1 across both wholesale and DTC.

Asia net revenues were roughly in line with prior year on a reported basis and up 6 percent on a constant currency basis.

Other brands’ net revenues increased 10 percent on both a reported and constant-currency basis.

Review of Levi Strauss performance across retail channels

DTC (direct-to-consumer) net revenues increased 8 percent on a reported basis and 11 percent on a constant currency basis reflecting a 12 percent increase in the US and a 7 percent increase in Europe.

Revenues from e-commerce grew 19 percent on a reported and constant-currency basis, reflecting double-digit growth across the Levi’s and Beyond Yoga brands. DTC comprised 47 percent of total net revenues in the second quarter.

Wholesale net revenues grew 7 percent on a reported basis and 8 percent on a constant-currency basis. Adjusting for the shift in wholesale shipments and the exit of the Denizen business, global wholesale net revenues decreased 4 percent to prior year, reflecting sequential improvement from Q1.

Levi Strauss reaffirms outlook

Confirming its outlook, Levi Strauss said that the company continues to expect reported net revenues to be up 1 percent to 3 percent year-over-year.

Adjusted diluted EPS is expected to be between 1.17 dollars to 1.27 dollars, inclusive of a 5-cent adverse impact to EPS attributable to the company’s new distribution and logistics strategy, increased marketing spend in H2, and incremental FX headwinds.

The company has declared an 8 percent increase to the dividend to 13 cents per share totaling approximately 52 million dollars payable in cash on August 20, 2024 to the holders of record of Class A common stock and Class B common stock at the close of business on August 2, 2024.