admin Levi Strauss & Co. reported third quarter net revenues of 1.5 billion dollars, consistent with the prior year on a reported basis and 2 percent lower on a constant-currency basis.
Net income for the quarter decreased to 10 million dollars, adjusted net income dropped to 112 million dollars and diluted earnings per share were 2 cents compared to 43 cents in the third quarter of 2022.
For fiscal 2023, the company forecasts reported net revenues to remain flat to up 1 percent year-over-year and adjusted diluted EPS is expected to be on the low-end of the previously guided range of 1.10 dollars to 1.20 dollars.
“In the third quarter, we delivered double-digit growth in our direct-to-consumer business, driven by strong comp-store gains, which helped offset continued softness in the wholesale channel, primarily in the U.S.,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co.in a statement.
Highlights of Levi Strauss’ Q3 results
The company’s DTC (direct to consumer) net revenues increased 14 percent on a reported basis and 13 percent on a constant-currency basis, driven by broad-based growth in both company-operated mainline and outlet stores and e-commerce.
Revenues from e-commerce grew 19 percent on a reported basis and 18 percent on a constant-currency basis reflecting double-digit growth across all brands. As a percentage of third quarter net revenues, DTC comprised 40 percent of total net revenues.
Wholesale net revenues for the quarter declined 8 percent on a reported basis and 10 percent on a constant-currency basis as growth in Asia and Latin America was offset by declines in North America and Europe.
Operating margin of 2.3 percent was down from 13.1 percent in Q3 2022, adjusted EBIT margin declined 330 basis points to 9.1 percent and gross margin was down 130 basis points to 55.6 percent with adjusted gross margin was down 130 basis points to 55.6 percent.
Levi Strauss posts decline in sales across Americas and Europe
In the Americas, net revenues decreased 5 percent on a reported basis and 7 percent on a constant-currency basis. DTC net revenues increased 12 percent on a reported basis and 11 percent on a constant-currency basis driven by company-operated mainline and outlet stores and e-commerce. Wholesale net revenues decreased 12 percent on a reported basis and 14 percent on a constant-currency basis as softness in North America was partially offset by growth in Latin America.
In Europe, net revenues decreased 2 percent on a reported basis and 6 percent on a constant-currency basis; excluding Russia, net revenues decreased 3 percent on a constant-currency basis. DTC net revenues increased 10 percent on a reported basis and 6 percent on a constant-currency basis, and 11 percent excluding Russia, driven by company-operated mainline and outlet stores and e-commerce. Wholesale net revenues decreased 10 percent on a reported basis and 14 percent on a constant-currency basis, reflecting the cautious order environment among wholesale partners.
Asia net revenues increased 12 percent on a reported basis and 18 percent on a constant-currency basis, reflecting growth across almost all markets, including strong growth in China. DTC net revenues rose 15 percent on a reported basis and 23 percent on a constant-currency basis, driven by strength in company-operated mainline and outlet stores and e-commerce. Wholesale net revenues increased 8 percent on a reported basis and 13 percent on a constant-currency basis.
Other brands’ net revenues increased 12 percent on a reported basis and 9 percent on a constant-currency basis. Dockers increased 9 percent on a reported basis and 5 percent on a constant-currency basis as strong growth internationally and in DTC was partially offset by U.S. wholesale. Beyond Yoga rose 25 percent on reported and constant-currency basis.
