The denim manufacturer reveals bad figures
10 Apr. 2014
Levi’s Q1 results show net income reduction of 53%
The denim and fashion apparel company Levi Strauss & Co. (LS&Co.) has published the financial results for the first quarter (Q1) of 2014, which ended on February 23. All together, the numbers reflect a weakened performance in almost all the variables analyzed. The net income declined from $107 million in the same period of 2013 to $50 million this year. This represents a drop of 53%. According to the company, this drop reflects restructuring and other charges related to the launch of a “global productivity initiative”, whose core is the elimination of nearly 800 jobs in order to save costs.
Further, the operating income went down to $94 million in this first quarter ($181 million in the prior year). Among the reasons adduced are, the restructuring costs mentioned earlier, higher selling and administrative expenses as well as a lower gross margin ($592 million 2013 - $576 million 2014).
Taking a look at the different markets, Europe and Asia showed incremented net revenues during this year’s first quarter. In Europe, this growth was due to performance and expansion of the company-operated retail network, whereas in Asia the growth occurred thanks to improved product availability during the Chinese New Year sales season. On the other hand, the Americas region presented a 3% decrease of net revenues at wholesale because of lower sales of women’s products.
Regarding the Q1 financial outcome, LS&Co. president and CEO Chip Bergh stated: “We knew the first quarter would be challenging, but a heavier promotional environment and unusually bad weather made it even more difficult than we expected. While we anticipate the market environment to remain challenging for the next few quarters, we are staying focused on what’s within our control—product, commercially-driven marketing, and our cost structure—to drive long-term profitable growth.”
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