For the three months to August 30, 2015, net income at denim jeans marketer Levi Strauss & Co. drove up 15 per cent year over year, reflecting higher operating income and lower interest expense.
In a press release, Levis said its net income soared 15 per cent to $58 million in the third quarter of fiscal 2015 as against $51 million in the three months to August 24, 2014.
However, net revenues grew much slower at just 1 per cent from a fiscal ago quarter and amounted to $1,142 million in the reporting quarter, but grew 7 per cent on a constant-currency basis.
Wholesale revenue too climbed 7 per cent, led by product introductions in the Americas, including the Levi's brand women's denim collection and was complimented by retail sales growth of 8 per cent.
On a reported basis, gross profit in the third quarter of fiscal 2015 increased to $573 million compared with $562 million for the same quarter of fiscal 2014.
“Currency translation unfavourably impacted gross profit by approximately $45 million,” the company added in the press release.
Gross margin for the quarter under review grew to 50.2 per cent of revenues vis-à-vis 48.7 per cent of revenues in the prior fiscal's third quarter.
According to Levis, gross margin rose mainly due to lower negotiated product costs and streamlined supply chain operations, while price increases also benefited gross margin.
Adjusted EBIT grew 8 per cent year on year on a reported basis and 23 per cent on a constant-currency basis, primarily reflecting an improved gross margin and the higher constant-currency revenues.
Adjusted EBIT, which excludes the charges associated with the company's global productivity initiative and debt refinancing, was $128 million, up from $119 million in the comparable quarter of fiscal 2014.
Levis further added that the higher EBIT reflects higher gross margin and higher constant-currency revenues, but currency unfavourably impacted adjusted EBIT by $15 million
As on August 30, 2015, cash and cash equivalents of $273 million were complemented by $549 million available under the company's revolving credit facility, resulting in a total liquidity position of $822 million.
Net debt at the end of the third quarter of fiscal 2015 remained at $0.9 billion, while free cash flow was zero, as higher cash from operations was offset by higher capital expenditures and a higher dividend payment.
“In the third quarter, we were encouraged by the initial response to our new product introductions, as well as the continued strength of our international retail business,” said CEO Chip Bergh.
“Although we expect traffic at retail to remain challenging in the fourth quarter, we are confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis,” Bergh informed. (AR)
Fibre2Fashion News Desk – India