Reporting its results for the three months to 29 May, Levi Strauss & Co said net revenues of US$1.5bn increased 15% on a reported basis, and 20% on a constant-currency basis, excluding $47m in unfavourable currency impacts.
Direct-to-Consumer (DTC) net revenues were up by 16%, driven by company-operated stores. As a percentage of second-quarter company net revenues, sales from DTC stores and e-commerce comprised 30% and 7%, respectively, for a total of 37%.
The company’s global digital net revenues grew approximately 3% compared to the same period in the prior year and comprised about 20% of second-quarter fiscal 2022 net revenues.
Net income, meanwhile, fell to $49.7m from $64.7m in the same quarter of the prior year, primarily due to a decline in operating income to $76m from $107m a year earlier. Levi Strauss attributed the fall in operating income to $60m of charges related to the Russia-Ukraine crisis.
Adjusted net income was $117m compared to $93m in the same quarter of the prior year, while diluted earnings per share decreased to $0.12 from $0.16 last time. Adjusted diluted earnings per share increased to $0.29, more than the 0.23 per share Wall Street expected, according to a report published by CNBC.
Gross margin was 58.1% of net revenues, as compared to 58.8% last time.
“Our second-quarter results demonstrate the power of our strategy, which continues to support strong revenue growth and margin expansion,” says Chip Bergh, president, and chief executive officer of Levi Strauss & Co.”Our brands are resonating with consumers across geographies, channels, and product categories. By continuing to advance our most impactful growth drivers – being brand-led, direct to consumer first, and diversifying the portfolio, we are well-positioned to continue to drive growth and create significant value for all our stakeholders.”
CFO Harmit Singh adds: “We delivered another solid quarter, growing reported net revenues 15% and adjusted EBIT 27%, while returning $80m in capital to shareholders. Although the operating environment remains dynamic, the diversity of our business is providing the resilience and flexibility needed to drive solid financial results in fiscal year 2022, while progressing us on our path to achieve net revenues of $9-$10bn and adjusted EBIT margin of 15% by fiscal year 2027.”
The company reaffirmed expectations for fiscal 2022 with net revenue growth of 11-13% compared to FY 2021, between $6.4-$6.5bn.
Last month, Levi Strauss & Co unveiled plans to hit $9bn-$10bn in revenues by 2027 by elevating and strengthening its brands in addition to its investment in stores, online platforms, and other digital capabilities.