Levi Strauss: Q3 revenues rise 4 percent, profit declines

For its third quarter, Levi Strauss & Co. said net revenues grew 4 percent on a reported basis, and 5 percent on a constant-currency basis excluding 19 million dollars in unfavourable currency effects to 1.40 billion dollars. Adjusted net income decreased 5 million dollars compared to the prior year, due to 11 million dollars more in tax benefits recorded in the third quarter of 2018, while adjusted diluted earnings per share were 31 cents, compared to 34 cents for the same prior-year period.

“We delivered strong third-quarter results and remain on-track to achieve our full-year expectations,” said Chip Bergh, President and CEO of Levi Strauss & Co. in a statement, adding, “As for the fourth quarter, we again expect strong performance in international, direct-to-consumer, women’s and tops, and improved comparisons for U.S. wholesale.”

Review of Q3 performance at Levi Strauss

The company added that its direct-to-consumer business grew by 12 percent on a constant-currency basis due to expansion and performance of the retail network and e-commerce growth. Net revenues from the company’s wholesale business grew 1 percent on a reported basis and two percent on a constant-currency basis, reflecting growth in Europe and Asia.

Gross profit of 767 million dollars for the quarter rose 3 percent on a reported basis from 742 million dollars in the prior year. Gross margin was 53 percent of net revenues, compared with 53.2 percent in the same quarter of 2018.

Adjusted EBIT grew 2 percent on a reported basis and 4 percent on a constant-currency basis compared to the prior year due to revenue growth. Adjusted EBIT margin was 12.2 percent, 20 basis-points lower than the prior year on a reported basis, due to the currency effect on gross margin.

Year-to-date net revenues of 4.2 billion dollars grew 5 percent on a reported basis and 8 percent on a constant-currency basis, while the company’s direct-to-consumer business grew 13 percent on a constant-currency basis due to performance and expansion of the retail network and e-commerce growth. Wholesale net revenues grew 3 percent on a reported basis and 5 percent on a constant-currency basis reflecting growth in all regions.

Adjusted EBIT of 464 million dollars increased 6 percent on a reported basis and 11 percent on a constant currency basis and adjusted EBIT margin was 11.1 percent, 10 basis-points higher than the prior year on a reported basis, and 30 basis-points higher than the prior year on a constant-currency basis. Net income of 299 million dollars increased from 188 million dollars, while adjusted net income of 348 million dollars increased 16 percent as compared to the prior year. Diluted earnings per common share for the first nine months were 73 cents, compared to 48 cents for the same prior-year period and adjusted diluted earnings per share were 85 cents, compared to 77 cents for the same prior-year period.

Highlights of Levi Strauss results across geographies

In the Americas, net revenues declined 3 percent on both a reported and on a constant-currency basis due to a decline in the wholesale business, offset in part by growth in the direct-to-consumer business. Direct-to-consumer net revenues growth of 9 percent reflected the Levi’s brand’s strength in the region. The company said, decline in wholesale primarily reflected a Dockers line reset in the second half of 2018, reduced shipments to the off-price channel in 2019, and the impact in 2019 of a pending acquisition of a South American distributor.

In Europe, net revenues grew 14 percent on a reported basis and 18 percent on a constant-currency basis, reflecting continued broad-based growth in both direct-to-consumer and wholesale channels across the region. The region’s operating income grew 34 percent on a reported basis and 39 percent on a constant currency basis.

In Asia, net revenues grew 9 percent on a reported basis and 12 percent on a constant-currency basis, reflecting strong performance across traditional wholesale and direct-to-consumer channels across the region. The region’s operating income grew 18 percent on a reported basis and 25 percent on a constant-currency basis.

Reaffirming its full-year expectations for 2019, Levi Strauss said, it expects constant-currency net revenues growth of 5 and a half to 6 percent including the impact of the South American distributor acquisition announced in August; gross margin approximately flat to prior year on a reported basis; gross margin expansion in the range of 40-60 basis points excluding all currency effects, both translation and transaction; adjusted EBIT margin approximately flat to prior year on a reported basis; adjusted EBIT margin expansion in the range of 10 basis points excluding currency effects from translation; additionally, due to the strong U.S. dollar, the company anticipates currency translation will adversely impact the full-year reported net revenues growth rate by about 275 basis points and the full-year reported adjusted EBIT growth rate by about 450 basis points.

Picture:Facebook/Levi's

 

RELATED NEWS

MORE NEWS

 

Latest jobs

 

MOST READ