• Q2 earnings climb to US$11.7m
  • Gross margin reaches 49.4%
  • Sales fall 6%
Levi saw earnings improve in its second-quarter

Levi saw earnings improve in its second-quarter

Levi Strauss & Co has booked mixed results in its second-quarter as earnings improved but sales fell on the back of a strong dollar and the loss of its women’s Dockers wholesale brand in the Americas.

The US denim giant reported net income of US$11.7m in the three months to the end of May. This compared with earnings of $11.4m a year earlier and was impacted by a $14m loss on debt retirement in conjunction with an April refinancing of notes scheduled to mature in 2020.

Gross margin for the quarter grew to 49.4% compared with 49% in the same quarter of 2014. Excluding $43m in unfavourable currency translation effects, gross margin improved 80 basis points, primarily due to lower negotiated product costs and a streamlined supply chain.

Net revenues, however, were down 6% on a reported basis and edged up 1% on a constant-currency basis. Lower sales at wholesale, primarily in the Americas, were offset by increased sales from the group's retail network in Europe and Asia.

Net revenues in the Americas declined 4% to $622m primarily due to the loss of women’s Dockers products at wholesale due to the business transitioning to a license model.

In Europe, currency translation unfavourably impacted sales as they fell 15% to $222m, while in Asia, revenues were down 5% to $168m.

Nonetheless, CEO Chip Bergh offered an upbeat outlook: "In an environment that continues to be challenging, we were pleased to grow second quarter revenues on a constant-currency basis, due to our strong results in Europe and Asia. We continue to focus on what we can control, and make investments to generate consumer demand. As we move into the second half of 2015, we remain confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis, and look forward to the full global reset of our Levi's women's product line."