Levi Strauss Asian business declines in Q2 FY'12

-         Net revenues increased in the Americas primarily reflecting higher revenues from the company’s Levi’s brand retail stores and increased sales of Denizen and Signature brand products.  Levi’s and Dockers brand net revenues declined at wholesale, as the benefit of price increases was offset by volume declines in certain major wholesale customers and a decline in sales to lower-margin channels.

-         Net revenues in Europe decreased primarily due to a lower volume of sales to the traditional wholesale channelsand to franchisee stores, reflecting the ongoing depressed retail environment, most notably in southern Europe.  Net revenues of the company-operated retail network grew, reflecting improved performance of its stores.

-         Net revenues in Asia Pacific decreased as key markets, such as India and China, faced increased economic challenges.  Both Levi’s and Denizen brand revenues declined.

Cash Flow and Balance Sheet

Cash provided by operating activities was $328 million for the first half of 2012, compared with $85 million for the same period in 2011, reflecting the company’s improved working capital utilization, particularly receivables and inventories. 

During the second quarter of 2012, the company refinanced a portion of its debt, taking advantage of lower interest rates and extending its bond maturity dates.  The company completed an offering of $385 million of 6.875 percent senior notes due in 2022 and used the net proceeds to complete a tender offer for its outstanding 8.875 percent notes and to repurchase a portion of its 4.25 percent Yen-denominated Eurobonds, both due in 2016. 

The company paid a $20 million dividend during the second quarter of 2012.  Net debt at the end of the second quarter of 2012 was $1.5 billion, compared to $1.8 billion at the end of 2011, and the company’s total liquidity position was $864 million.

“In the face of challenging economic conditions, we continued to improve our liquidity position and manage our working capital closely.  Across the company, we are focused on improving our operations and business performance to navigate through these difficult times,” said Blake Jorgensen, chief financial officer of Levi Strauss & Co. 

Levi Strauss & Co. is one of the world’s largest brand-name apparel companies and a global leader in jeanswear.

Levi Strauss & Co