Levi Strauss Profit Climbs on Margin Improvement, Women's Sales
14 October 2015 - 8:20AM
Dow Jones News
Levi Strauss & Co. said Tuesday that profit in its latest
quarter grew 15%, padded by the introduction of its new women's
denim collection, though revenue declined slightly as overseas
sales were hurt by the stronger dollar.
In the Americas, where the San Francisco, Calif., jeans maker
generates most of its sales, revenue rose 2.3% to $713 million,
breaking a streak of two straight quarters of declines.
In Europe, sales fell 9.8% to $258 million, though excluding
currency effects, sales grew 12%. In Asia, revenue edged down to
$170 million from $171 million; on a constant-currency basis they
improved 9%.
"Currencies are a challenge for any global company, and we've
seen headwinds there," Chief Executive Chip Bergh said in an
interview. "We've been talking about the second half needing to be
strong and planned a siege for the quarter, and we're happy with
the results."
The retailer saw improvement in gross margins in every region as
total gross margin for the quarter grew to 50.2% of revenue
compared with 48.7% a year earlier. Levi executives said margins
were helped by pricing increases in Europe, including Russia and
Mexico, and by the fact that its higher-margin international
business is growing faster than in the Americas.
Mr. Bergh said company-owned stores saw double-digit growth for
women's clothing with the introduction in August of its new denim,
which he said sold "through or out" in many stores.
Overall, Levi reported a profit of $58.2 million for the quarter
ended in August, up from $50.6 million a year earlier. Revenue
edged down to $1.14 billion from $1.15 billion a year earlier.
Excluding currency effects, revenue was up 7%.
The closely held apparel maker is in the process of outsourcing
its finance function, as part of a larger initiative to pare down
costs. The plan calls for shifting several of operations such as
human resources, IT and customer service to a third-party.
Chief Financial Officer Harmit Singh said in an interview that
the benefits of the restructuring were reflected in the quarter's
margins.
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(END) Dow Jones Newswires
October 13, 2015 17:05 ET (21:05 GMT)
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