Levi Strauss Q3 revenues up seven percent
By Prachi Singh
Oct 14, 2015
Net revenues at Levi Strauss & Co for the third quarter ended August 30, 2015 declined one percent on a reported basis but grew seven percent on a constant-currency basis. The company said that a seven percent increase in sales was due to product introductions in the Americas including the Levi's brand women's denim collection, complimented by retail sales growth of eight percent, reflecting expansion of the retail network in Europe and Asia.
“In the third quarter, we were encouraged by the initial response to our new product introductions, as well as the continued strength of our international retail business,” said Chip Bergh, President and Chief Executive Officer, adding, “Although we expect traffic at retail to remain challenging in the fourth quarter, we are confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis.”
Reports profit growth in Q3
Net income grew fifteen percent reflecting higher operating income and lower interest expense. Adjusted EBIT grew eight percent on a reported basis and 23 percent on a constant-currency basis primarily reflecting an improved gross margin and the higher constant-currency revenues.
On a reported basis, gross profit in the third quarter increased to 573 million dollars compared with 562 million dollars for the same quarter of 2014. Currency translation unfavourably impacted gross profit by approximately 45 million dollars. Gross margin grew to 50.2 percent of revenues compared with 48.7 percent of revenues in the same quarter of 2014, primarily due to lower negotiated product costs and streamlined supply chain operations.
Adjusted EBIT, which excludes the charges associated with the company’s global productivity initiative and debt refinancing, was 128 million dollars, up from 119 million dollars in the same quarter of 2014, primarily reflecting the higher gross margin and higher constant-currency revenues.
Net revenues up in Americas
Net revenues in the Americas grew in the wholesale channel primarily due to the introduction of new products, including the Levi's brand women's denim collection. Excluding currency effects, net revenues grew five percent. Operating income growth primarily reflected an improvement in the region's gross margin.
In Europe, currency translation unfavourably impacted net revenues and operating income by 54 million dollars and 11 million dollars, respectively. Excluding the currency effects, net revenues grew 12 percent and operating income grew 32 percent, reflecting performance and expansion of the company-operated retail network and an improvement in the region's gross margin.
In Asia, net revenues were flat and operating income was up 48 percent on a reported basis. Excluding currency effects, net revenues and operating income grew nine percent and 66 percent, respectively, reflecting growth in the company-operated retail network and an improvement in the region's gross margin.