American clothing firm Levi Strauss & Co has reported a decrease of 8 per cent in net revenues in the first quarter of fiscal 2024 (Q1 FY24) compared to the same quarter last year, amounting to $1.6 billion. This decline was consistent across both reported and constant-currency bases.

In a detailed breakdown of its geographical performance, the company reported an 11 per cent decrease in net revenues in the Americas on both a reported and constant-currency basis. However, after adjusting for the shift in wholesale shipments and the exit from the Denizen business, revenues in both the Americas and the US saw a slight increase of 2 per cent. European revenues also saw a decrease of 7 per cent on a reported basis and 8 per cent on a constant-currency basis. Meanwhile, Asia showed resilience with net revenues remaining steady on a reported basis and climbing 5 per cent on a constant-currency basis, showcasing growth across most markets.

The company's direct to consumer (DTC) net revenues painted a brighter picture, reporting a 7 per cent increase on a reported basis and 8 per cent on a constant-currency basis. DTC sales, which now represent a record 48 per cent of total net revenues, were particularly strong in the US with a 10 per cent increase and in Europe (excluding Russia) with a 4 per cent rise. E-commerce also showed robust growth, with revenues growing 13 per cent on a reported basis and 12 per cent on a constant-currency basis, Levi Strauss & Co said in a press release.

Wholesale net revenues, however, faced a steeper decline, falling 18 per cent on a reported basis and 19 per cent on a constant-currency basis.

The financial metrics further reveal a downturn in operating margin, which fell sharply to 0.03 per cent from 9.3 per cent in Q1 FY23. Nonetheless, gross margin improved, up 240 basis points to 58.2 per cent. Selling, general, and administrative expenses saw a slight increase to $791 million from $774 million in the prior year, with adjusted selling, general, and administrative expenses climbing to $766 million from $757 million.

Net income took a hit, turning into an $11 million loss compared to a net income of $115 million in Q1 FY23. Adjusted net income also saw a decrease, standing at $103 million compared to $135 million in the same quarter of the previous year. Diluted loss per share was $0.03, a drop from the diluted earnings per share of $0.29 in Q1 FY23, with adjusted diluted earnings per share decreasing to $0.26 from $0.34.

“We started the year strong delivering results above expectations, underscoring the power of the Levi’s brand and the progress we are making on our strategic priorities. Both newness and strength in our core offerings are fuelling consumer demand and driving meaningful market share gains,” said Michelle Gass, president and CEO of Levi Strauss & Co. “The momentum in our global DTC business continues, with DTC up in all segments. Our efforts to stabilise our wholesale business are delivering results. We are on our way to transforming this company into a best-in-class DTC-first apparel retailer, setting the stage for our next phase of sustainable profitable growth.”

Fibre2Fashion News Desk (DP)

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