Strong sales in the Americas and the benefits of currency exchange lifted earnings results for denim giant Levi Strauss & Co. during the first quarter.
“We’re off to a good start in 2010,” said John Anderson, president and chief executive officer, during a conference call with analysts.
For the three months ended Feb. 28, the San Francisco-based company reported a 17.2 percent rise in earnings to $56.4 million, compared with earnings of $48.1 million in the same period a year ago.
Revenues increased 8.8 percent to $1.04 billion from $951.5 million, while sales gained 9.1 percent to $1.02 billion from $931.3 million. The Levi’s brand accounted for about 84 percent of sales, or $853.4 million.
Sales in the Americas rose 8.2 percent to $545.2 million from $503.9 million. The segment realized a boost of $6 million due to currency exchange, but gains were also reported for the Levi’s brand in the men’s, juniors and boy’s wholesale channel. Declines continued with the U.S. Dockers label and with the Signature by Levi Strauss brand.
“We’re still in the early stages of our efforts to reenergize the khaki category and the Docker’s brand,” said Robert Hanson, president of Levi Strauss Americas.
While sales were down, Hanson said the company had picked up more customers for Dockers and that online sales did increase after the label’s Super Bowl spot. Anderson added that Dockers posted double-digit gains in Europe.
European revenues rose 14.5 percent to $306.1 million from $267.3 million, aided by a $21 million favorable impact of currency exchange. Continued sales declines in the European wholesale segment were offset by expansion of company-owned stores in the region.
Asia-Pacific revenues gained 2 percent to $183.8 million from $180.3 million. However, discounting a $12 million favorable impact of currency exchange, revenues would have declined. The company’s problems in the region are tied primarily to lower sales in Japan.
“India and China remain the growth engines for the region,” said Anderson.
Management said economic conditions remain challenging and that wholesale customers have continued to focus on keeping inventory levels low. However, the economic environment is allowing the company to lease retail space in prime locations for better rates. Stores are being added across India and China, and Anderson said most of the U.S. outlet stores it acquired last year have been remodeled.