Near flat FY'12 sales growth at Levi Strauss

08 Feb '13

4 min read

Regional Overview

• In the Americas, the net revenue increase was driven by higher sales in Levi’s brand retail stores across outlet and online channels. Wholesale net revenues declined, reflecting fewer sales to lower-margin channels and the company’s third-quarter decision to license the Levi’s brand boys business.

• Net revenues in Europe increased on a constant-currency basis, reflecting growth of the company-operated retail network. Sales to traditional wholesale channels declined, reflecting the ongoing depressed retail environment, most notably in southern Europe.

• The net revenue decline in Asia Pacific reflected high channel inventories and challenging market conditions. The company’s decision in the third quarter of 2012 to phase out the Denizen brand in Asia also contributed to the decline in revenues.

Fiscal Year 2012 Highlights

• Gross profit for the fiscal year was $2,199 million compared with $2,292 million in 2011, reflecting unfavorable currency effects and the company’s decision to phase out the Denizen brand in Asia. Gross margin of 48 percent of revenues in 2012 reflected a slight decline from the prior year. Excluding unfavorable currency effects and the impact of the Denizen brand phase-out, gross margin improved due to increased revenue from company-operated stores, the decline in sales to lower-margin channels and the benefit of the lower cost of cotton.

• SG&A expenses declined to $1,865 million for 2012 compared with $1,956 million in the prior year, primarily due to favorable currency effects and lower advertising and promotion expenses.

• Operating income for 2012 was $334 million compared to $336 million the prior year, primarily due to unfavorable currency effects. On a constant-currency basis, higher operating income primarily reflected lower expenses.

Levi Strauss & Co.

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