US-based apparel retailer Levi Strauss & Co (Levi Strauss) has registered a 9% decline in net revenues of $1.33bn in the second quarter (Q2) of fiscal year (FY) 2023.
During the same period in 2022, the company’s net revenues totalled $1.47bn.
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For the reported quarter, which ended 28 May 2023, the net revenues of Levi Strauss’ Direct-to-Consumer (DTC) operations were up by 13% on a reported basis and 14% on a fixed currency basis.
This increase was primarily due to growth in e-commerce as well as company-operated mainline and outlet stores.
However, net revenues from wholesale operations fell by 22%, both on a reported and fixed-currency basis.
Levi Strauss has attributed this decrease in the figures to the shift in wholesale shipments from Q2 to Q1, resulting from the US Enterprise resource planning (ERP) implementation that had a negative impact on Q2 by nearly $100m, or 7% of net revenues.
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By GlobalDataLevi Strauss president and CEO Chip Bergh said: “Our strong Q2 DTC and international results in a challenging environment demonstrate the resilience of our business model and the health of the Levi’s brand globally.
“While US wholesale remains pressured, we are pursuing initiatives to stabilise this business and drive market share gains. We are confident in our ability to navigate near-term headwinds and remain as optimistic as ever about the company’s future.”
The retailer’s operating income for the reported quarter of FY23 decreased to $9.9m from $76m in Q2 FY22.
The gross profit for the Q2 FY23 was $784m, compared to $855m in the Q2 of the previous year.
Levi Strauss’ adjusted diluted earnings per share (EPS) for Q2 FY23 were $0.04 while its EPS for Q2 FY22 was $0.29.
Levi Strauss chief financial and growth officer Harmit Singh said: “While we are adjusting our full year outlook, we expect H2 revenues up mid-single-digits and a low-double-digit adjusted EBIT margin as strong growth in our large DTC and International businesses continue.”
For the full FY23, the company now expects its net revenues to increase by 1.5% to 2.5% year-over-year, rather than the previously announced forecast of 1.5% to 3%.
Levi Strauss has a global footprint of 3,200 brand stores and shop-in-shops. The company sells its products through a combination of chain retailers, department stores and online sites.
