US: Costs push Levi Strauss Q2 earnings down
- Q2 earnings dropped to US$11m
- Gross margin narrow to 49%
- Sales fall 2%
Jeans giant Levi saw its earnings plummet in the second quarter
Jeans giant Levi Strauss & Co saw its earnings plummet in the second quarter, hurt by restructuring and debt extinguishment-related charges, as well as lower wholesale revenues in the Americas.
In the three months ended 25 May, earnings declined to US$11m from $48m a year earlier. The company recorded $28m in restructuring and other charges related to Levi's global productivity initiative, and a debt extinguishment charge of $11m.
Gross margin also declined in the quarter, to 49% of revenues compared with 49.9% in the year-ago quarter. The decline reflected an unfavourable sales mix and product investment costs.
Sales were down 2% to $1.08bn on a reported basis and 1% on a constant-currency basis, reflecting lower sales at wholesale in the Americas, partially offset by an improved performance in Europe and Asia.
"While we are encouraged by business improvements in Europe and Asia, ongoing traffic declines and an increasingly promotional environment continue to pressure our Americas region," said CEO Chip Bergh.
"We will continue to focus on what's within our control - from cost structure, to conversion in our stores, to engaging consumers with great product and innovation - in order to drive long-term profitable growth."
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