Levi Strauss & Co. reported first quarter net revenues grew 22 per cent on a reported basis and 16 per cent excluding $55 mn in favourable currency translation effects, driven by broad-based Levi’s brand growth in all regions and channels. The company also raised full-year 2018 revenue growth guidance to 6 to 8 per cent range in constant currency.”The momentum and growth trends we saw in the back half of last year not only continued but accelerated in the first quarter,” said Chip Bergh, President and CEO, Levi Strauss & Co., adding, “Our results clearly demonstrate that our strategies are working and that the incremental investments we are making in marketing, direct-to-consumer expansion and our more diversified portfolio are paying off.”
On a reported basis, direct-to-consumer revenues grew 24 per cent on performance and expansion of the retail network, as well as ecommerce growth. The company had 56 more company-operated stores at the end of the first quarter 2018 than it did a year prior. Wholesale reported revenues, the company said, grew 21 per cent primarily reflecting higher revenues from Europe and the Americas. Net income declined $79 mn due to a $136 mn provisional non-cash tax charge as a result of the enactment of the 2017 Tax Cuts and Jobs Act. Excluding this non-cash charge, adjusted net income was $117 mn, nearly double over last year’s $60 mn. Adjusted EBIT grew 59 percent reflecting higher gross margins and the revenue growth. On a reported basis, gross margin for the first quarter was 54.9 per cent of revenues compared with 51.2 per cent in the same quarter of fiscal 2017.
Operating income of $174 mn was up 61 per cent for the first quarter compared to the same quarter of fiscal 2017, and operating margin increased to 13 per cent, primarily reflecting the revenue growth and higher gross margins, partially offset by higher SG&A. In the Americas, excluding favourable currency effects of $6 mn, net revenues grew 13 per cent reflecting higher revenues across wholesale and direct-to-consumer channels in all markets in an improving retail environment, including a particularly strong holiday season in the United States. In Europe, excluding favourable currency effects of $39 mn, net revenues grew 30 per cent reflecting broad-based growth across all markets, channels, and product categories, with the strongest growth in women’s and tops.
In Asia, excluding favourable currency effects of $10 mn, net revenues grew 5 per cent reflecting direct-to-consumer expansion and performance. The increase in operating income in all three regions, the company added, reflects higher net revenues and gross margins, partially offset by higher direct-to-consumer and advertising investments.