Jul 12, 2015
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Levi’s revenue down in second quarter

Jul 12, 2015

The company reports that net revenues declined six percent on a reported basis and grew one percent on a constant-currency basis. Lower sales at wholesale, primarily in the Americas, were offset by increased sales from the retail network in Europe and Asia.

Net income was impacted by a $14 million loss on debt retirement in conjunction with the April refinancing of notes scheduled to mature in 2020. Adjusted EBIT declined thirty-two percent on a reported basis and twenty percent on a constant-currency basis primarily reflecting increased advertising spend and investment in the company's direct-to-consumer channels.

“In an environment that continues to be challenging, we were pleased to grow second quarter revenues on a constant-currency basis, due to our strong results in Europe and Asia,” said Chip Bergh, president and chief executive officer.

On a reported basis, gross profit in the second quarter declined to $500 million compared with $530 million for the same quarter of 2014, and gross margin for the second quarter grew to 49.4 percent of revenues compared with 49.0 percent of revenues in the same quarter of 2014.

Adjusted EBIT was $63 million, down from $93 million in the same quarter of 2014, primarily reflecting unfavorable currency effects and the higher SG&A.
Operating income of $48 million in the second quarter was down from $65 million in the same quarter of 2014 reflecting lower Adjusted EBIT and lower restructuring charges.

Net revenues in the Americas declined primarily due to the loss of women’s Dockers products at wholesale as that business transitions to a license model.

In Europe, currency translation unfavorably impacted net revenues and operating income by $56 million and $11 million, respectively. Excluding the currency effects, net revenues grew eight percent and operating income grew twenty-four percent, reflecting growth from performance and expansion of the company-operated retail network.

In Asia, net revenues were down five percent and operating income was down 38 percent on a reported basis. Excluding currency effects, net revenues and operating income grew two percent and declined thirty-four percent, respectively, reflecting growth in the company-operated retail network in a promotional environment

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