Levi Strauss Q2 revenues drop, lowers outlook

Second quarter net revenues at Levi Strauss & Co. of 1.3 billion dollars decreased 9 percent on a reported and constant-currency basis.

The company said in a release that the planned shift in wholesale shipments from Q2 to Q1 negatively impacted the quarter performance by approximately 100 million dollars or 7 percent of net revenues.

Net loss for the quarter was 2 million dollars, adjusted net income declined to 15 million dollars, and adjusted diluted earnings per share were 4 cents compared to 29 cents in Q2 2022.

"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 U.S. wholesale remains pressured, we are pursuing initiatives to stabilise this business and drive market share gains," said Chip Bergh, president and chief executive officer of Levi Strauss & Co.

Highlights of Levi Strauss Q2 results

The company’s DTC net revenues increased 13 percent on a reported basis and 14 percent on a constant-currency basis, driven by broad-based growth in both company-operated mainline and outlet stores and e-commerce.

E-commerce increased 20 percent on a reported basis and 21 percent on a constant-currency basis reflecting double-digit growth across all segments.

The company’s wholesale net revenues decreased 22 percent on reported and constant-currency bases as strong growth in Asia and Latin America was offset by declines in North America and Europe.

Global wholesale net revenues were down low-double-digits on top of nearly 20 percent constant-currency growth in the prior year. Global wholesale net revenues in the first half were up low-single-digits versus 2019.

Levi Strauss posts revenue decline in the Americas and Europe

In the Americas, net revenues decreased 22 percent on reported and constant-currency bases. DTC net revenues increased 6 percent, while wholesale net revenues decreased 33 percent.

In Europe, net revenues decreased 2 percent on reported and constant-currency bases; excluding Russia, net revenues increased 1 percent on a constant-currency basis. DTC net revenues increased 7 percent on a reported basis and 6 percent on a constant-currency basis, and 14 percent excluding Russia.

Wholesale net revenues decreased 10 percent on reported and constant-currency bases, reflecting the cautious order environment among wholesale partners.

Asia net revenues increased 18 percent on a reported basis and 27 percent on a constant-currency basis, reflecting growth across almost all markets, including strong growth in China. DTC net revenues rose 30 percent on a reported basis and 41 percent on a constant-currency basis. Wholesale net revenues increased 5 percent on a reported basis and 13 percent on a constant-currency basis.

For other brands, Dockers and Beyond Yoga combined, net revenues decreased 1 percent on a reported basis and 2 percent on a constant-currency basis. Beyond Yoga rose 28 percent on reported and constant-currency bases, while Dockers declined 9 percent on a reported basis and 10 percent on a constant-currency basis. In H1, other brands' net revenues increased 11 percent, reflecting Dockers net revenues growth of 8 percent and Beyond Yoga up 19 percent.

Levi Strauss lowers fiscal 2023 guidance

For fiscal 2023, the company’s reported net revenues are now expected to grow between 1.5 percent to 2.5 percent versus prior expectations of 1.5 percent to 3 percent.

Adjusted diluted EPS is now expected between 1.10 dollars to 1.20 dollars versus 1.30 dollars to 1.40 dollars previously.