Net revenues up 12% at Levi Strauss in Q2
Levi Strauss & Co. (LS&Co.) announced financial results for the second quarter ended May 29, 2011, and filed its second-quarter 2011 results on Form 10-Q with the Securities and Exchange Commission.
Second-quarter net revenues increased 12 percent on a reported basis, reflecting sales growth in each region. Increased net revenues were driven by the Levi's brand through the expansion and performance of the company's retail network. Excluding the effect of currency, net revenues improved 8 percent.
Net income improved to $21 million as compared to a $14 million loss in the second quarter of last year. In the second quarter of 2010, the company recorded two significant discrete tax charges and an early debt extinguishment loss associated with refinancing.
“I am pleased to report that revenues and net income improved for the second quarter,” said John Anderson, president and chief executive officer of Levi Strauss & Co. “Our top-line improvement demonstrates that our global strategies are working. Around the world, the Levi's brand is performing well as consumers are responding to our craftsmanship and compelling products.”
Anderson added, “As I retire and turn the reins over to a new CEO on September 1, I am proud of the good momentum we've established in the marketplace. The company has creative, experienced leaders in place and exciting initiatives ahead, including the first Levi's brand global marketing campaign this fall, innovative designs, and the expansion of our new brand, Denizen.”
Second-Quarter 2011 Highlights
- Gross profit in the second quarter increased to $541 million compared with $499 million for the same period in 2010, reflecting the company's higher net revenues. Gross margin for the second quarter remained in the company's expected range, but decreased to 49 percent of revenues compared with 51 percent of revenues in the same quarter of 2010. The gross margin decline reflects the impact of higher-priced cotton and an increase in discounted sales to manage inventory. Gross margin continued to benefit from an increased contribution from company-operated retail stores.
- Selling, general and administrative (SG&A) expenses for the second quarter increased to $476 million from $430 million in the same period of 2010. Higher SG&A was primarily due to additional selling expenses related to the expansion of the company-operated retail network.
- Operating income for the second quarter declined to $65 million compared with $69 million for the same period of 2010, as the increase in revenue were offset primarily by a lower gross margin and the company's continued investment in its retail expansion.
For Regional net revenues for the quarter Click here.
- Higher net revenues in the Americas were due to the Levi's brand, which had higher sales in both the company's operated retail stores and wholesale channel, including the success of the Levi's Curve ID collection for women. The higher net revenues also reflected the price increases that the company has implemented. The improved Levi's brand performance was partially offset by declines from the Dockers brand in the United States.