Levi Strauss & Co. said its second-quarter loss widened as financing costs erased the positive effects of higher sales and margins and advantageous currency swings.
For the three months ended May 30, the net loss attributable to the San Francisco-based denim and sportswear firm rose to $14.4 million from $4.1 million in the year-ago period. Included in the bottom-line result was a $16.6 million pretax loss on the early extinguishment of debt. Operating income, exclusive of the debt effect, was up 23.4 percent to $69.2 million from $56.1 million a year ago.
Sales rose 8.1 percent to $958 million, versus $886.5 million in the 2009 quarter, and licensing revenue grew 3.2 percent to $18.6 million from $18 million. Total revenues moved up 8 percent to $976.5 million from $904.5 million, and gross margin rose 522 basis points to 51.1 percent of sales against 45.9 percent in the year-ago period. The company said that the improvement reflected the increased contribution of the company’s stores and their higher margins compared to wholesale operations.
In the Americas, sales were up 8 percent, to $558 million, and grew 6 percent on a constant currency basis. In Europe, sales increased 9 percent, to $240 million, and gained 7 percent at constant currency. Asia-Pacific sales hit $178 million, an 8 percent rise that, upon conversion for currency effects, translated into a 2 percent decline.
“We continue to invest behind the brands,” John Anderson, president and chief executive officer, said on a conference call with analysts. “We believe we have a compelling consumer proposition. We selectively look to continue to invest in retail. It’s a battle.”
He said Japan continues to detract from results in the Asia-Pacific region, but added that he was somewhat encouraged by results in Europe: “If there’s good news, it is that there is no further deterioration.”
For the six months, net income dropped 4.5 percent to $42 million, from $43.9 million, as total revenues picked up 8.6 percent to $1.97 billion, from $1.82 billion. Year-to-date operating income was up 8.8 percent to $176.5 million from $162.1 million during the first six months of 2009, and gross margin improved to 51.3 percent of sales from 46.4 percent.
Cash and cash equivalents rose to $353.1 million as of May 30, 30.4 percent above the $270.8 million on the books as of Nov. 29. Inventories rose to $452.5 million from $451.3 million six months earlier.
Long-term debt stood at $1.78 billion on May 30, down from $1.83 billion on Nov. 29.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
This Just In: Industry sources have told WWD that Anastasia Soare is rumored to be considering selling her beauty business, @anastasiabeverlyhills. According to those sources, Soare has tapped investment bank Imperial Capital to explore sale options for her eponymous beauty brand –– and with at least $340 million in net sales, this would be a big deal. Put in context of other recent transactions for makeup companies, Soare’s price tag could be in the billions if she were to sell the whole thing. #wwdnews #wwdbeauty (📷: @clint_spaulding)
@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)