• Q1 earnings down 22.8% to US$38.3m
  • Gross margin narrows to 50.9%
  • Sales fall 7% to $1.05bn
Levi said unfavourable currency effects significantly impacted revenues

Levi said unfavourable currency effects significantly impacted revenues

Denim giant Levi Strauss has offered an upbeat outlook for the year despite booking a decline in first quarter earnings and sales hit by unfavourable currency effects.

Earnings in the three months ended 1 March dropped to US$38.3m from $49.6m a year earlier, a decline of 22.8% on the prior year.

Gross margin narrowed to 50.9% of revenues compared with 51% in the year ago quarter.

Net revenues declined 7% on a reported basis to $1.05bn, and 1% on a constant-currency basis. Lower sales at wholesale and retail in the Americas, primarily reflecting a shift in the company's fiscal calendar as compared to the prior year, were partially offset by increased sales from the retail network in Europe and Asia.

"As anticipated, unfavourable currency effects significantly impacted our revenues and adjusted EBIT in the first quarter, and the currency-neutral decline reflected the shift in our fiscal calendar, which last year included the Black Friday week," said CEO Chip Bergh.

Nonetheless, he said the underlying health of the business remains strong, as it continues to focus on savings generated from its improving structural economics.

"While the second quarter will again be a difficult comparison to the prior year, we remain confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis, as we continue to focus on driving retail conversion, engaging with consumers globally with our Live in Levi’s campaign, and look forward to the full global reset of our Levi's women's product line in the second half of the year."