Falling sales in the U.S. and European markets coupled with rising costs led Levi Strauss & Co. to a 41.2 percent earnings slide during the third quarter.
For the three months ended Aug. 30, the San Francisco-based denim giant saw earnings decline to $40.7 million, compared with earnings of $69.2 million during the same period a year ago. Selling, general and administrative expenses rose $7.4 million, or 1.9 percent, to $396 million.
“There’s no question we’re in tough times,” John Anderson, president and chief executive officer, said during a conference call with analysts. “Despite these conditions, our Levi’s brand performed well globally, particularly in America.”
Revenues fell 6.3 percent to $1.04 billion during the quarter from $1.11 billion. Sales declined 6.1 percent to $1.02 billion from $1.09 billion and licensing revenues dropped 17.1 percent to $18.6 million from $22.4 million.
Unfavorable currency exchange rates and a weak retail environment sent revenues for the company’s European business down 13 percent to $266 million compared with $305.9 million a year ago. The poor exchange rate negatively affected revenues by about $36 million. Declines were linked primarily to the wholesale channel and the women’s Levi’s Red Tab business.
Despite expectations of persistent tough market conditions, the company continues to invest in expanding its retail operations in Europe. Levis marked the opening of its largest store in Europe in September — a 6,480-square-foot flagship in Rome. Similar projects are being eyed for Paris and London.
In the Americas, lagging sales of the Dockers brand in the U.S. and the mass channel Signature label pulled down revenues 5.1 percent to $615.9 million from $648.9 million. The Levi’s brand has been a primary driver, particularly the men’s 501 style and straight and skinny fits. Sales of men’s and women’s Levi’s product were up during the quarter.
“We are seeing wholesale customers continue to manage their inventories pretty tightly, regardless of market conditions or brand performance,” said Robert Hanson, president of Levi Strauss Americas.
Hanson said wholesale customers have become accustomed to driving performance off lower inventory levels and are unlikely to change their habits in the near term.
The Asia-Pacific region was the only area to post gains during the quarter, revenues were up 1.6 percent to $158.4 million from $156 million. The sole weak point in the region has been Japan. Management saw a rapid shift in the shopping habits of Japanese consumers during the second quarter as they gravitated to cheaper fast-fashion retailers.
“We’ve seen a fundamental recalibration of consumers,” Anderson said of the Japanese market. “Outside Japan, we’re not seeing that.”
For the first nine months of the year, earnings fell 49.3 percent to $84.6 million from $167 million. Revenues declined 7.5 percent to $2.9 billion from $3.13 billion. Sales were off 7.3 percent to $2.84 billion from $3.06 billion. The Levi’s brand accounted for 77 percent of net sales, or $2.18 billion. Licensing revenues fell 13.5 percent to $56.8 million from $65.6 million.
All three global regions saw revenues decline, led again by Europe with a 16.4 percent fall in revenues to $754.5 million from $902.3 million. Currency exchange accounted for $129 million in revenue declines. Revenues for the Americas slid 4 percent to $1.64 billion from $1.71 billion. Asia-Pacific revenues declined 3.3 percent to $504.6 million from $521.7 million.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews