Levi Strauss strongly on the up in Europe but flat in the Americas
Levi Strauss is going full steam ahead in Europe. The US group, owner of Levi's and Dockers, generated $301 million in sales in the region in the first quarter of the current fiscal year, closed at the end of February. The result is equivalent to a 15% increase before exchange rate adjustments (+12% after) over the same period a year earlier, when Europe was already growing at a +8% clip.
Europe's dynamic performance contributed to a revenue rise of 4% for the group in the first quarter, when Levi Strauss reached $1.102 billion (€1.032 billion). Direct sales rose faster, at +10%, while the wholesale channel grew 2%. In the Americas region, sales were worth $578 million, for a mere 1% rise (+2% before exchange rate adjustments), with positive results in Mexico and the group's directly owned stores counterbalancing a wholesale slump in the USA. In Asia, sales grew by 2% both before and after exchange rate adjustments, reaching $214 million.
"We were able to deliver solid results despite the wholesale shortfall in the USA, thanks to the breadth of our portfolio, said Chip Bergh, the group's CEO. We made headway in all our three regions, and especially in Europe, with impressive double-digit growth in direct sales to customers and also in womenswear and tops."
To buttress its sales growth, the group has recently launched the fourth instalment of the Live in Levi’s advertising campaign, as well as a Dockers campaign targeting young entrepreneurs.
Europe is buoyant also in terms of operating profit, which grew by 27% in the region, while it rose only 3% in the Americas, reaching $90 million, and it fell by 12% in Asia, down to $36 million. After taking into account centralised services, the group's operating result stood at $108 million, compared to nearly $117 million a year earlier. Levi Strauss explained the shortfall by a marked decrease in its gross margin, from 53% to 51.2%, and to investment for the expansion of the retail network, which grew by 51 stores at the end of February compared to a year earlier. The group's net income was $60 million compared to $65 million a year earlier.
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