The company's direct-to-consumer (DTC) net revenues in Q3 FY23 also increased 12 per cent year-on-year (YoY) on a reported basis and 16 per cent YoY on a constant-currency basis, driven by broad-based growth in both company-operated stores and e-commerce across all segments. E-commerce revenue increased 11 per cent YoY on a reported basis and 14 per cent YoY on a constant-currency basis. As a percentage of the first-quarter company net revenues, sales from DTC stores and e-commerce comprised 33 per cent and 9 per cent, respectively, for a total of 42 per cent.

However, gross profit in Q1 FY23 was $942 million compared to $944 million last year. Gross margin was 55.8 per cent, down from 59.3 per cent in Q1 FY22, with an adjusted gross margin of 55.8 per cent, down 360 basis points. Adjusted selling, general, and administrative expenses were $757 million, up 30 basis points compared to Q1 FY22, Levi Strauss & Co said in a press release.

Operating income was $157 million in Q1 FY23 compared to $234 million in Q1 FY22, and adjusted EBIT was $185 million compared to $238 million last year. The company’s income was $115 million compared to $196 million in Q1 FY22.

The company's segment overview reveals that in the Americas, net revenues grew 7 per cent YoY on reported and constant-currency bases, driven by both DTC and wholesale channels. DTC net revenues increased 15 per cent YoY, driven by strength in the company-operated mainline and outlet stores and e-commerce. Furthermore, Americas’ wholesale net revenues grew 4 per cent YoY.

In Europe, net revenues decreased 3 per cent YoY on a reported basis. DTC net revenues increased 4 per cent YoY on a reported basis and 8 per cent YoY on a constant-currency basis. Wholesale net revenues decreased 8 per cent YoY on a reported basis and 3 per cent YoY on a constant-currency basis. Operating income for the segment decreased due to lower net revenues and gross margins and higher selling, general, and administrative expenses as a percentage of net revenues.

In Asia, net revenues in Q1 FY22 increased 12 per cent YoY on a reported basis and 22 per cent YoY on a constant-currency basis. DTC net revenues increased 15 per cent YoY on a reported basis and 25 per cent YoY on a constant-currency basis, driven by strength in the company-operated mainline and outlet stores and e-commerce. Wholesale net revenues increased 9 per cent YoY on a reported basis and 19 per cent YoY on a constant-currency basis.

For other brands, Dockers, and Beyond Yoga combined, net revenues increased 24 per cent YoY on a reported basis and 25 per cent YoY on a constant-currency basis. Dockers was up 28 per cent YoY on a reported basis and 29 per cent YoY on a constant-currency basis. Beyond Yoga was up 11 per cent YoY on reported and constant-currency bases.

For fiscal 2023 the company expects net revenues between $6.3 billion and $6.4 billion, reflecting reported revenue growth of 1.5 per cent to 3 per cent YoY. Adjusted diluted EPS is projected to be between $1.30 and $1.40, the release added.

"Our first quarter results reflect the strength of our brands and the progress we are making against our strategic priorities," said Chip Bergh, president and chief executive officer of Levi Strauss & Co. "We delivered strong growth in our international business and record-breaking revenue performance in our DTC channel. As we celebrate the 150th anniversary of the iconic 501 jean, we are deepening connections with consumers and cementing loyalty with the next generation of Levi’s fans. This past quarter in the US, we were the market share leader among the key 18- to 30-year-old consumer, and we continued to grow share in our women’s denim bottoms business, further narrowing the gap to number one."

Fibre2Fashion News Desk (DP)