US apparel firm Levi Strauss & Co's revenue at $1.5 bn in Q3 FY23

A significant surge was noted in direct-to-consumer (DTC) net revenues, which rose by 14 per cent on a reported basis and 13 per cent on a constant-currency basis. This growth was underpinned by a consistent performance across company-operated mainline and outlet stores, coupled with a robust e-commerce sector, which alone witnessed a growth of 19 per cent on a reported basis. Notably, DTC contributed to 40 per cent of the total net revenues for the quarter.

However, the wholesale net revenues declined by 8 per cent on a reported basis and 10 per cent when adjusted for constant currency. While Asia and Latin America reported growth, it was offset by declines in the more established markets of North America and Europe, the company said in a press release.

Revenues in the Americas experienced a 5 per cent dip on a reported basis in Q3 FY23, and a slightly steeper 7 per cent when adjusted for constant currency. Europe reported a 2 per cent decline in net revenues on a reported basis, which increased to 6 per cent on a constant-currency basis. However, excluding Russia from the equation, the decrease was at 3 per cent on a constant-currency basis. Asia, contrasting with other regions, reported an uptick with net revenues growing 12 per cent on a reported basis and 18 per cent when adjusted for constant currency.

Furthermore, the company's 'other brands' category saw an increase of 12 per cent on a reported basis in Q3 FY23 and 9 per cent on a constant-currency basis. Within this category, Dockers saw a growth of 9 per cent on a reported basis, while Beyond Yoga showcased an impressive 25 per cent growth on both reported and constant-currency bases.

However, in Q3 FY23, the operating margin took a hit, plummeting to 2.3 per cent from the previous 13.1 per cent reported in Q3 FY22. The gross margin also decreased by 130 basis points, standing at 55.6 per cent. The selling, general and administrative expenses saw an increase, reaching $715 million, compared to the $664 million in Q3 FY22. The quarter concluded with a net income of $10 million, a significant drop from the $173 million reported in Q3 FY22. The adjusted net income stood at $112 million, compared to $161 million in the same quarter of the previous fiscal. Lastly, the diluted earnings per share settled at $0.02, a decrease from $0.43 in Q3 FY22, the release added.

“In the third quarter, we delivered double-digit growth in our direct-to-consumer business, driven by strong comp-store gains, which helped offset continued softness in the wholesale channel, primarily in the US,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “We are focused on the levers within our control and the actions we took in the third quarter are beginning to drive improvements in US wholesale trends.”

Fibre2Fashion News Desk (DP)