US: Levi Strauss Q1 earnings more than double
- Net income reached US$107m from $49m
- Net revenue fell 2% to $1.1bn
- Asia Pacific revenue fell 11% to $203m
Levi Strauss & Co saw first quarter net earnings more than double as the jeans brand said margin improvement offset a slight decline in sales.
Net income increased to US$107m over the quarter ended 24 February, from $49m in the same period of the prior year.
Net revenue fell 2% to $1.1bn, which it attributed to lower sales in Asia Pacific and the impact from licensing the Levi's brand boys business.
"In the first quarter, we generated strong cash flow and posted a higher gross margin and net income, despite slightly lower revenues," said Chip Bergh, president and chief executive officer.
"We're committed to reducing debt and strengthening the balance sheet. Our cash flow and a successful debt refinancing we executed after the quarter closed have allowed us to pay down $185 million of our debt this year."
Gross margin rose to 52% from 47% a year earlier, which reflected the lower cost of cotton, increased sales from the company's retail stores and a favourable currency impact.
In the Americas, revenue was flat at $647m, but operating income increased 66% to $132m. In Europe, revenue rose 2% to $297m, with operating income increasing 21% to $63m. However, revenue in the Asia Pacific region fell 11% to $203m as operating income increased 19% to $49m.
The company said its performance in Asia Pacific was due to lower sales at both company-operated and wholesale channels, due to challenging conditions in most markets in the region, most notably China.
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