Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Levi Strauss profit declines on trouble in the Americas

Stock Markets Oct 08, 2019 05:03PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People pass by a Levi Strauss store in New York

(Reuters) - Levi Strauss & Co (N:LEVI) reported a 4% drop in third-quarter profit on Tuesday, as the denim apparel maker struggled to grow its wholesale business in the Americas, where it generates most of its revenue.

Reduced shipments to off price stores and the impact of a delayed acquisition of a South American distributor drove net revenue down about 3% in the region, the first fall since the 165-year-old company went public in March.

"U.S. wholesale was challenged... particularly the legacy department stores and chain stores, where (the) much publicized traffic declines have negatively impacted our business," Chief Executive Officer Chip Bergh said in an interview with Reuters.

The deteriorating retail landscape has forced longstanding brick-and-mortar chains, including J.C. Penney Co Inc (N:JCP), to explore options, as they struggle to boost the profile of their e-commerce business to rival established player Amazon.com Inc (O:AMZN).

Bergh said Levi's has been selling less to off price retailers, including TJX Cos Inc's (N:TJX) T.J. Maxx and Ross Stores (O:ROST).

"We do not make products for that channel the way other apparel manufacturers do. We only sell to that channel... the distressed inventory that we're trying to clear... we don't think its good for the brand," Bergh said.

Levi's results were also hit by a delay in the acquisition of its South American distributor, which includes 80 retail stores across the markets of Chile, Peru and Bolivia, and is now expected to close in the first quarter of 2020.

The company has also been investing in its online and retail business, while expanding in China, Brazil and India among other markets to make up for slowdown in its wholesale business at the cost of lower profits.

Overall, the wholesale business grew only 1%, drawing strength from Europe and Asia.

Net income attributable to the company fell to $124.5 million, or 30 cents per share, in the quarter ended Aug. 25, from $130.1 million, or 33 cents per share, a year earlier.

Gross margin declined 20 basis points due to the impact of stronger dollar.

Still, third-quarter revenue came above Wall Street estimates, as the blue-jeans maker benefits from a resurgence of the denim trend and its move to sell directly to customers in stores and online than through wholesalers.

This helped revenue in Europe and Asia rise about 14% and 9%, respectively.

Net revenue rose 3.8% to $1.45 billion, compared with the average estimate of $1.44 billion projected by analysts, according to IBES data from Refinitiv.

Levi Strauss profit declines on trouble in the Americas
 

Related Articles

Former Deutsche Bank co-CEO Anshu Jain dies
Former Deutsche Bank co-CEO Anshu Jain dies By Reuters - Aug 13, 2022 7

(Reuters) -Anshu Jain, a top finance executive best known for helping German lender Deutsche Bank AG (NYSE:DB) take on the largest Wall Street firms, died overnight on Saturday...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email