US: Levi Strauss Q3 profit falls on sales drop in Asia
- Q3 profit down 12.5% to $28m
- Revenues slip 8.6% to $1.10bn
- Gross margin remains flat at 47.3%
Denim giant Levi Strauss & Co has booked a 12.5% fall in third-quarter net profit on the back of weaker revenue in Asia Pacific as the company phases out the Denizen brand in the region.
Net profit reached US$28m for the three months ended 26 August, compared to $32m the year before. Operating income reached $87m, up from $81m in the same quarter last year.
Net revenues declined 8.6% to $1.10bn primarily due to the ongoing economic challenges and the phasing out of the Denizen brand in Asia.
Sales in the Americas slipped 5% to $679m because of the decision to license the Levi's brand boys business in the country. Sales dropped 3% in Europe to $266m, while revenues in Asia Pacific slumped 26% to $156m.
Gross margin remained flat at 47.3%. However, excluding currency and Denizen impacts, gross margin improved because of increased sales from retail stores and lower cotton costs.
"While the third quarter was impacted by the continuing difficult global macro-economic environment, we are very focused on what we can control: our product innovation and marketing programmes, the key strategic choices we make and addressing our underlying cost structure," said Chip Bergh, president and CEO of Levi Strauss & Co.
"Our goal is to prioritise efforts behind our core business to drive sustainable, profitable growth and drive shareholder value."
Earlier this week, Levi Strauss & Co announced the resignation of Aaron Beng-Keong Boey, president of its Denizen brand and head of commercial operations for Asia Pacific.
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