US firm Levi Strauss & Co's revenue at $1.3 bn in Q2 FY23

Direct-to-consumer (DTC) net revenues saw an increase of 13 per cent year-on-year (YoY) on a reported basis and 14 per cent YoY on a constant-currency basis, primarily driven by significant growth in company-operated mainline and outlet stores, as well as e-commerce. Particularly in e-commerce, the company witnessed a 20 per cent YoY rise on a reported basis and 21 per cent YoY on a constant-currency basis, reflecting robust double-digit growth across all segments.

However, wholesale net revenues dropped 22 per cent YoY on reported and constant-currency bases. This occurred as strong growth in Asia and Latin America was negated by declines in North America and Europe, the company said in a media release.

Breaking down by regions, Levi Strauss reported a 22 per cent YoY decrease in net revenues in the Americas on both reported and constant-currency bases. In Europe, net revenues decreased 2 per cent YoY on reported and constant-currency bases. However, excluding Russia, European net revenues increased by 1 per cent YoY on a constant-currency basis. Meanwhile, Asia's net revenues surged 18 per cent YoY on a reported basis and 27 per cent YoY on a constant-currency basis.

For other brands in the company’s portfolio, Dockers and Beyond Yoga combined, net revenues saw a 1 per cent YoY decrease on a reported basis and 2 per cent YoY on a constant-currency basis. Notably, Beyond Yoga witnessed a 28 per cent YoY rise on reported and constant-currency bases, while Dockers declined 9 per cent YoY on a reported basis and 10 per cent YoY on a constant-currency basis. However, international growth and DTC offset the decline in US wholesale for Dockers. In the first half of FY23, other brands' net revenues increased by 11 per cent, reflecting Dockers net revenues growth of 8 per cent and Beyond Yoga's increase of 19 per cent.

Levi's operating margin declined from 5.2 per cent in Q2 FY22 to 0.7 per cent in Q2 FY23, a 450-basis-point drop. Adjusted EBIT margin also experienced a decline, falling 750 basis points to 2.4 per cent from 9.9 per cent in the previous year.

Gross margin increased 60 basis points to 58.7 per cent in Q2 FY23, up from 58.1 per cent in Q2 FY22. Adjusted gross margin was up 50 basis points to 58.7 per cent from 58.2 per cent last year. Selling, general and administrative expenses were reported as $774 million compared to $779 million in Q2 FY22. Adjusted selling, general and administrative expenses were $753 million compared to $711 million in the previous year.

The company reported a net loss of $2 million in Q2 FY23, a significant shift from a net income of $50 million in Q2 FY22. Adjusted net income was $15 million compared to $117 million in Q2 FY22, the release added.

"Our strong Q2 DTC and international results in a challenging environment demonstrate the resilience of our business model and the health of the Levi’s brand globally," said Chip Bergh, president and chief executive officer of Levi Strauss & Co. "While US wholesale remains pressured, we are pursuing initiatives to stabilise this business and drive market share gains. We are confident in our ability to navigate near-term headwinds and remain as optimistic as ever about the company’s future."

Fibre2Fashion News Desk (DP)