Levi Strauss Q1 net sales decline 1 percent

REPORT_ Announcing its financial results for the first quarter ended February 23, 2014, Levi Strauss said that its

net revenues declined one percent on a reported basis and were flat on a constant-currency basis, reflecting lower sales at wholesale in the Americas, partially offset by improved performance in Asia and Europe. First quarter net income declined 53 percent to 50 million dollars.

Excluding the global productivity initiative charges, adjusted EBIT declined nine percent to 159 million dollars. San Francisco headquartered company’s gross profit in the first quarter declined to 576 million dollars compared with 592 million dollars for the same quarter of 2013.

“We knew the first quarter would be challenging, but a heavier promotional environment and unusually bad weather made it even more difficult than we expected,” said Chip Bergh, President and Chief Executive Officer, adding, “While we anticipate the market environment to remain challenging for the next few quarters, we are staying focused on what’s within our control—product, commercially-driven marketing, and our cost structure—to drive long-term profitable growth.”

Gross margin for the first quarter was down slightly to 51 percent of revenues compared with 51.6 percent of revenues in the same quarter of 2013. Operating income of 94 million dollars in the first quarter was down from 181 million dollars in the same quarter of 2013.

Net revenues in the Americas were down at wholesale, primarily due to lower sales of women’s products. Retail sales grew, primarily due to the timing of the Black Friday sales week, which occurred during the company’s first quarter. Operating income declined due to the region’s lower gross margin and net revenues. Net revenues in Europe grew on a constant-currency basis due to performance and expansion of the company-operated retail network. Net revenues in Asia grew on a constant-currency basis, reflecting improved product availability during the Chinese New Year sales season.