Weak sales in the U.S. and skyrocketing costs sent Levi Strauss & Co.'s earnings tumbling during the second quarter.
For the three months ended May 25, earnings sank 98.5 percent to $701,000 from net income of $45.7 million in the same period a year ago. Revenues fell 7.9 percent to $936.3 million from $1.02 billion, while sales slid 8.2 percent to $915.1 million from $997.3 million.
"We expected the second quarter to be tough, and it was," said John Anderson, president and chief executive officer. "The retail environment in the United States remained challenging. In addition, our transition to a new enterprise resource planning system in the United States negatively affected our results."
Revenues for the Americas plunged 19.3 percent to $477 million compared with revenues of $591 million in the same period a year ago. Management chalked up the bulk of the declines to challenges encountered implementing the planning system and a substantial slowdown in U.S. Dockers sales. The Levi's and Signature by Levi Strauss businesses both turned in smaller declines.
European revenues increased 9.8 percent to $268 million compared with revenues of $244 million a year ago. However, without the benefit of currency exchange, revenues fell 4 percent. Management cited weak performance on the wholesale side of the business, offset by sales growth in company-owned stores.
Asia Pacific revenues rose 5.5 percent to $191 million from $181 million. Again, excluding the positive effect of currency exchange, revenues fell 1 percent. While developing markets in the region continue to perform, problems persist in mature markets like South Korea and Japan, Levi’s said.
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