Levi Strauss posts 13 mn dollars decline in Q2 net income
By Prachi Singh
12 Jul 2017
Net revenues at Levi Strauss grew 6 percent on a reported basis and 7 percent excluding 11 million dollars in unfavourable currency translation effects to 1,068 million dollars, for the second quarter ended May 28, 2017. Net income, Levi Strauss said, however, declined 13 million dollars primarily due to a 23 million dollars loss on early extinguishment of debt. Adjusted EBIT grew 7 percent reflecting higher revenue and gross margins.
"Our strong year-to-date revenue growth reinforces the benefits of a more balanced portfolio as our women’s, tops, direct-to-consumer and international businesses delivered solid results, despite a slight decline in the US wholesale business. Based on the performance in the first half, we are raising revenue growth guidance for the full year,” said Chip Bergh, President and CEO, Levi Strauss & Co. in a media statement.
Second quarter financial highlights
The company said, direct-to-consumer revenues grew 13 percent on performance and expansion of the retail network, as well as ecommerce growth. Wholesale revenues grew 2 percent reflecting growth in Europe.
On a reported basis, gross margin for the second quarter was 52.3 percent of revenues compared with 51.1 percent in the same quarter of fiscal 2016, reflecting the margin benefit from revenue growth in the direct-to-consumer channel and international business. The company had 61 more company-operated stores at the end of the second quarter of 2017 than it did at the end of the second quarter of 2016. Operating income grew 8 percent and operating margin was approximately flat year-over-year.
In the Americas, excluding unfavourable currency effects of 3 million dollars, net revenues grew 3 percent, which the company attributed to higher direct-to-consumer revenues in the US and higher revenues in Canada and Mexico, partially offset by a decline in US wholesale as lower Dockers revenue offset growth in Levi's, Signature and Denizen brands.
In Europe, excluding unfavourable currency effects of 7 million dollars, the company said, net revenues grew 20 percent reflecting broad-based growth across all markets and channels, including exceptional growth in the women's and tops business. Operating income growth of 31 percent reflects improved leverage driven by higher net revenues and gross margins. In Asia, excluding unfavourable currency effects of 1 million dollars, net revenues grew 3 percent reflecting direct-to-consumer expansion and performance.
Picture:Levi Strauss website