Yesterday, Thursday, US denim specialist Levi Strauss & Co., which owns Levi’s, Dockers, Signature by Levi Strauss & Co., Denizen and Beyond Yoga, announced quarterly sales and profits that exceeded expectations. As of May 29, the second quarter ended with sales of 1.45 billion euros (1.47 billion US dollars). The forecast was only 1.41 billion euros (1.43 billion US dollars).
Reported net sales increased 15 percent, up 20 percent in constant currency, compared to the second quarter of 2021, driven by growth in all business segments. Gross margin was 58.1 percent, unchanged from the comparable quarter of 2021. Net income was 49.5 million euros ($50 million); Adjusted Net Income was €115.8 million (US$117 million) compared to €92 million (US$93 million) in the second quarter of 2021. Adjusted Gross Margin reflects the benefit of a higher proportion of sales in the year-ago period DTC channel, reduced promotions, a higher percentage of full price sales and price increases offset by the impact of higher product and freight costs.
Growth in all markets
In the Americas, net revenue increased 17 percent, driven by growth in both wholesale and DTC channels. Wholesale net sales grew 19 percent, driven by the Levi’s brand and particularly in the US.
In contrast, net income in Europe increased only 3 percent on a reported basis, but increased 15 percent on a constant currency basis. DTC net sales increased 23 percent, driven by the strength of its own outlet and branded stores. Net revenue across all digital channels fell 30 percent after growing more than 100 percent in the same period last year, and accounted for 23 percent of segment revenue for the quarter.
In Asia, net income increased 16 percent on a reported basis and 21 percent on a constant currency basis. Chip Bergh, President and Chief Executive Officer of Levi Strauss & Co. said, “While the operating environment remains dynamic, the diversity of our business provides the resilience and flexibility needed to deliver solid financial results in fiscal 2022 as we continue on our journey moving forward to achieve net sales of $9 billion to $10 billion and an adjusted EBIT margin of 15 percent by fiscal 2027.”
The good news boosted the stock market, with the company’s shares up about four percent in after-hours trading to $17.08.
Levi Strauss & Co.’s net sales in 2021 were US$5.8 billion (€5.7 billion at current exchange rates). For the year as a whole, the company stuck to its forecast of revenue growth of 11 to 13 percent compared to the previous year.