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Q3 revenue up 7% worldwide, Levi Strauss & Co
13 Oct '10
5 min read
• Selling, general and administrative (SG&A) expenses for the third quarter increased to $457 million from $396 million in the same period of 2009. Higher SG&A was primarily due to additional selling expenses related to the expansion of the company-operated retail network and higher advertising and promotion expenses in the Americas region as the company increased support for its Levi's and Dockers brands.
• Operating income for the third quarter was $86 million compared with $98 million for the same period in 2009. The 12 percent decrease primarily resulted from a planned increase in advertising and promotion expense.
• Net income was $28 million in the quarter, negatively impacted by a higher effective tax rate. The higher tax rate is driven by the company's likely inability to receive future tax benefits from net losses in Japan.
Regional Overview
• Higher net revenues in the Americas were primarily due to solid results in the wholesale channel, complementing the strong incremental contribution from the outlet stores acquired last year. These improvements were partially offset by lower U.S. Dockers brand sales.
• Net revenues in Europe decreased on a reported basis for the three-month period, reflecting unfavorable currency effects. The region's net revenues benefited from the 2009 acquisition of the footwear and accessories business and expansion of the company-operated retail network across the region. Revenue gains were partially offset by sales declines in the wholesale channels, reflecting the continued difficult economic environment.
• Net revenues in Asia Pacific increased during the quarter on a reported basis and constant currency basis reflecting the continued expansion of the company's brand-dedicated retail network in China and India as well as in other emerging markets, partially offset by continued declines in Japan during the quarter.
Cash Flow and Balance Sheet
The company ended the third quarter with cash and cash equivalents of $261 million, a decrease of $10 million from November 30, 2009. Cash provided by operating activities during the nine-month period was $96 million, compared with $174 million for the same period in 2009. In 2010, cash collections from customers increased on higher net revenues, offset by the investment in strategic initiatives and inventory build. Net debt of $1.6 billion at the end of the quarter was comparable to net debt at the end of 2009.
• Operating income for the third quarter was $86 million compared with $98 million for the same period in 2009. The 12 percent decrease primarily resulted from a planned increase in advertising and promotion expense.
• Net income was $28 million in the quarter, negatively impacted by a higher effective tax rate. The higher tax rate is driven by the company's likely inability to receive future tax benefits from net losses in Japan.
Regional Overview
• Higher net revenues in the Americas were primarily due to solid results in the wholesale channel, complementing the strong incremental contribution from the outlet stores acquired last year. These improvements were partially offset by lower U.S. Dockers brand sales.
• Net revenues in Europe decreased on a reported basis for the three-month period, reflecting unfavorable currency effects. The region's net revenues benefited from the 2009 acquisition of the footwear and accessories business and expansion of the company-operated retail network across the region. Revenue gains were partially offset by sales declines in the wholesale channels, reflecting the continued difficult economic environment.
• Net revenues in Asia Pacific increased during the quarter on a reported basis and constant currency basis reflecting the continued expansion of the company's brand-dedicated retail network in China and India as well as in other emerging markets, partially offset by continued declines in Japan during the quarter.
Cash Flow and Balance Sheet
The company ended the third quarter with cash and cash equivalents of $261 million, a decrease of $10 million from November 30, 2009. Cash provided by operating activities during the nine-month period was $96 million, compared with $174 million for the same period in 2009. In 2010, cash collections from customers increased on higher net revenues, offset by the investment in strategic initiatives and inventory build. Net debt of $1.6 billion at the end of the quarter was comparable to net debt at the end of 2009.
Levi Strauss & Co
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