Levi Strauss & Co. reported flat revenues of USD 1.5 billion for the third quarter, with stagnant sales growth in Asia unable to impend upon surging profits at the denim maker.
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By region, Americas revenues decreased 1 percent, partially offset by a 6 percent rise in Europe sales. The U.S. apparel firm said revenues in Asia, a region of recent strategic focus for the firm, were roughly in line with prior year on a reported basis and up 4 percent on a constant-currency basis.
By channel, direct-to-consumer revenues, making up 44 percent of total sales, increased 10 percent, reflecting a 12 percent gain in the U.S. and 9 percent growth in Europe. E-commerce sales grew 16 percent during the three months ending August 25. Finally, wholesale revenues fell 6 percent.
Aside from Levi’s, the groups other brand segments posted a 7 percent decrease, hit by a 15 percent in Dockers sales, partially offset by a 19 percent uptick in Beyond Yoga sales.
Despite the flat global revenues, the San Francisco-based firm posted net income of USD 21 million during the quarter, more than doubling profits from the USD 10 million in the prior-year period.
“The underlying fundamentals of our business are getting stronger, driven by the Levi’s brand, which grew 5 percent globally in Q3, a significant acceleration from H1 and the highest revenue growth in two years. We are making progress against our strategic priorities, including double-digit growth in our direct-to-consumer business, continued positive performance in the U.S., and Europe inflecting to growth,” said Michelle Gass, president and CEO of Levi Strauss & Co.
“Looking to Q4 and beyond, we will amplify our focus on the Levi’s brand, exemplified by our new campaign with Beyoncé and an innovative product pipeline designed to build momentum with our fans around the world.”
Coinciding with the earnings update, Levi’s said it is looking into strategic options for its struggling Dockers brand, including the sale of the apparel brand.
“We are taking decisive actions to address the areas where we’ve underperformed, including our decision to evaluate strategic alternatives for Dockers,” said Harmit Singh, chief financial and growth officer of Levi Strauss & Co.
“We remain confident in our ability to drive long-term shareholder value.”