• Q3 profit down 41% to $40.7m
  • Net revenue fell 6.3% to $1.04bn
  • Levi’s brand global revenue up in constant currency

Currency fluctuations and falling sales continue to hit Levi Strauss & Co, but the US jeans giant says it will continue to invest in its brands despite posting a 41% slump in third quarter profit.

One bright spot in a quarter characterised by a slowdown in spending by both consumers and its retail customers was higher global sales of the Levi's brand, particularly in the US.

"Overall, it was a productive quarter in light of the tough market conditions," president and CEO John Anderson said during the company's investor call. 

"Our teams around the world are intensely focused on strategies that we believe will build our brands, strengthen our competitiveness and drive future growth."

Expanding its retail operations and global footprint remain key, he said, adding: "We'll also concentrate our investments in the geographic markets that offer the greatest potential for return, and on market-leading innovations that will create great new products." 

The San Francisco based firm said net profit in the three months to 30 August dropped to $40.7m from $69.2m in the same period last year.

Net revenue fell 6.3% to $1.04bn from $1.11bn a year earlier. On a constant currency basis, net revenues would have dropped 2%, the company said.

Gross margin for the quarter was essentially flat at 47.5% compared with 47.9% last time.

Selling, general and administrative expenses rose by 1.8% to $396m with the cost of new stores and acquisitions largely offset by lower distribution and advertising and promotion costs.

Sales in the key Americas region were down by 5%, with lower demand for Dockers men's casual pants and Signature products partially offset by higher sales of the Levi's brand and additional revenues from the acquisition of 73 US outlet stores.

And in Europe, the Middle East and North Africa (EMEA), sales tumbled 13% on the impact of currency exchange rates - although they were down by a more modest 2% on a constant currency basis, Levi Strauss said.

Excluding currency effects, lower revenues were blamed on falling demand for Levi's Red Tab products for women in the wholesale channel, which was partially offset by increased sales from the company's expanding retail network.

"We continued to drive our investment in the European business, with the summer acquisition of our long-time footwear and accessories licensee, DC company, the September opening of our biggest European store in Rome and the successful conversion to full ownership of our joint venture in Russia," said Armin Broger, president Levi Strauss EMEA.

"Together, these initiatives have allowed us to diversify our business, our product offering and our market presence, and put us in a strong position to grow as the economy improves," he added.

Meanwhile in the Asia Pacific region, product promotions and continued retail store expansion, particularly in India and China helped lift revenues by 2%.

But the company noted Japan was hit by lower wholesale demand amid the slowing global economy, and a shift in consumer spending to lower-priced retailers.