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Levi Strauss revenues increase 7 percent in Q3

Net revenues at Levi Strauss grew 7 percent on a reported basis or 6 percent excluding 11 million dollars in favourable currency translation effects. Direct-to-consumer revenues grew 16 percent driven by performance and expansion of the retail network, as well as ecommerce growth, while wholesale revenues grew 4 percent reflecting growth in Europe. Net income declined 10 million dollars, which the company said reflects FX losses on hedging contracts of 19 million dollars, driven by the weakening of the US dollar against most foreign currencies.

"We are pleased with our progress this quarter and year-to-date. Our strategies are working and, despite the challenging retail environment, we are achieving profitable growth," said Chip Bergh, President and CEO, Levi Strauss, in a press statement.

Review of Levi Strauss’s Q3 results

The company said, adjusted EBIT grew 1 percent during the quarter as higher revenue and gross margins were offset by an 11 million dollars non-cash stock-based compensation expense recorded during the third quarter and the recognition of a 7 million dollars benefit from the resolution of a vendor dispute settled in the prior-year period.

Gross profit grew 11 percent and gross margin expanded 180 basis points to 51.8 percent primarily reflecting the margin benefit from revenue growth in the direct-to-consumer channel and international business.

Geographical performance of Levi Strauss in Q3

In the Americas, excluding favorable currency effects of 3 million dollars, net revenues grew 2 percent, reflecting strong performance in the company’s Signature and Denizen brands, as well as performance and expansion of the company-operated retail network, including ecommerce. Operating income for the Americas was flat as higher gross margins were offset by higher SG&A expense due to an increase in selling expenses and the recognition of the above mentioned dispute settlement.

In Europe, excluding favorable currency effects of 8 million dollars, revenues grew 20 percent reflecting broad-based growth across all markets and channels. Operating income growth of 32 percent reflects higher revenue and SG&A leverage.

In Asia, revenues grew 2 percent on both a reported and constant currency basis, reflecting direct-to-consumer expansion, partially offset by lower franchise revenue due to continued pressures in the China franchise channel. Operating income declined 2 million dollars due to lower China revenues and franchise support.

Picture:Levi Strauss website