Levi Strauss reports Q2 net revenue growth of 17 percent
By Prachi Singh
11 Jul 2018
For the second quarter ended May 27, 2018, Levi Strauss & Co. reported net revenues growth of 17 percent on a reported basis and 13 percent excluding 35 million dollars in favourable currency translation effects, driven by broad-based Levi's brand growth in all regions and channels. On a reported basis, direct-to-consumer revenues grew 19 percent on performance and expansion of the retail network, as well as ecommerce growth. The company said, it had 53 more company-operated stores at the end of the second quarter of 2018 than it did a year prior.
"We delivered our third consecutive quarter of double-digit revenue growth, driven by the disciplined execution of our strategies and our more diversified portfolio. These results have outpaced the industry and exceeded even our own expectations, and as a result, we are raising our full-year revenue guidance," said Chip Bergh, President and CEO, Levi Strauss & Co. in a statement.
Review of Levi Strauss’s Q2 performance
Wholesale reported revenues, the company said, grew 14 percent reflecting higher revenues in all regions. Net income for the quarter increased 59 million dollars primarily reflecting gains on the company's hedging contracts in the second quarter as compared with losses on hedging contracts and a debt refinancing charge in the second quarter of 2017. Adjusted EBIT, the company added, grew 15 percent reflecting the revenue growth and higher gross margins, partially offset by higher SG&A.
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On a reported basis, gross margin was 53.9 percent of revenues compared with 52.3 percent in the same quarter of fiscal 2017. Operating income was 77 million dollars, up 22 percent compared to the same quarter last year reflecting the revenue growth and higher gross margins, partially offset by higher SG&A.
Levi Strauss results across geographies
In the Americas, Levi Strauss said, excluding favourable currency effects of 1 million dollars, net revenues grew 11 percent reflecting higher revenues across wholesale and direct-to-consumer channels across the region. The region's operating income declined 5 percent as higher revenues were more than offset by planned increased direct-to-consumer and advertising expenses this quarter.
In Europe, excluding favourable currency effects of 28 million dollars, net revenues grew 19 percent reflecting continued broad-based growth across all markets, channels, and product categories, with the strongest growth in women's and tops. The region's operating income grew 53 percent reflecting higher revenues partially offset by direct-to-consumer and advertising investments.
In Asia, excluding favourable currency effects of 6 million dollars, net revenues grew 9 percent reflecting growth in direct-to-consumer channels and wholesale across the region. The region's operating income grew 73 percent reflecting higher revenues and gross margins, partially offset by direct-to-consumer investments.
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