US: Promotions and lower margins hit Levi Strauss Q4
- Q4 net profit falls to US$17m
- Gross margin narrows to 49.2%
- Sales fall 0.2%
Levi suffered from weaker sales in Europe
Jeans giant Levi Strauss & Co said lower gross margin and higher seasonal advertising spend hit earnings in the fourth quarter.
In the three months ended 24 November, Levi posted a net profit of US$17m, down from $53m a year earlier.
Gross margin narrowed to 49.2% from 50% in the year ago period, hurt by higher price promotion and markdown activity due to a slower holiday season. The decline ended a year of margin growth for the firm driven by easing cotton costs.
Revenues dropped 0.2% to $1.29bn on the back of weaker sales in Europe, which were down 5% to $279m.
In Levi's largest market, the US, sales edged up 1% to $828m, while Asia Pacific sales climbed 2% to $188m.
"In 2014 we will continue to focus on growing the business over the long term by driving our profitable core business, addressing key opportunities to build a more balanced portfolio, and improving our retail operations, while at the same time reducing our controllable costs," said CEO Chip Bergh.
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