The US clothing supplier Levi Strauss & Co. suffered declines in sales and earnings in the third quarter of the 2022/23 financial year. The weak wholesale business in America and Europe in particular had a negative impact on development. The company, which owns the brands Levi’s, Dockers and Beyond Yoga, again lowered its annual forecasts in view of the recent subdued demand.
According to the interim report published on Thursday evening, group sales in the three months to August 27th amounted to 1.51 billion US dollars (1.43 billion euros). This was 0.4 percent below the level of the same quarter of the previous year. Adjusted for exchange rate changes, revenue fell by 2.0 percent.
In its own retail sector, the clothing retailer achieved a sales increase of 14 percent (+13 percent adjusted for currency effects). However, this was not enough to fully compensate for losses in the wholesale business (-8 percent, -10 percent adjusted for currency effects).
The weak demand in America and Europe is weighing on sales development
The main brand Levi’s suffered significant declines in wholesale sales, especially in the USA and Europe. As a result, their total revenues in the Americas fell by five percent (-7 percent at constant currencies) to $767 million and in Europe by two percent (-6 percent at constant currencies) to $384 million. In Asia, sales increased by twelve percent (+18 percent adjusted for currency effects) to $246 million. The Dockers and Beyond Yoga brands together totaled $114 million, exceeding the previous year’s level by twelve percent (+9 percent adjusted for currency effects).
Cost increases, higher discounts and impairments amounting to $90.2 million for the Beyond Yoga brand, which was acquired in 2021, weighed on earnings. The reported net profit fell by 94 percent to 9.6 million US dollars (9.1 million euros). Adjusted for special items, the quarterly profit fell by 31 percent to $112 million.
Due to the persistently adverse economic conditions, management was more cautious for the rest of the year: sales development is now only expected to be between zero and +1 percent. Growth of 1.5 to 2.5 percent had previously been forecast. Diluted earnings per share adjusted for special items are expected to be “at the lower end” of the current forecast range of $1.10 to $1.20, the clothing retailer said.