Levi's revenue grows, but not without losses

Denim giant Levi's revealed its Q2 results, seeing net revenues increased 8 percent compared to last year due to worldwide growth of the Levi's brand. Income benefited from acquisitions made during 2009 and the company's ongoing

retail expansion, partially offset by revenue declines in the wholesale channel in certain markets. Levi's loss widened to $14.4 million from $4.1 million, for the quarter ending 30 May.

"We had another good quarter, which gives us solid revenue growth and operating income for the first six months of the year," said John Anderson, president and chief executive officer. "We are seeing the benefit of our investments in the business over recent years. The Levi's(R) brand is performing well, and consumers are responding to our more innovative products."

Higher net revenues in the Americas were primarily due to the contribution of the outlet stores acquired in 2009 and strong performance in men's, juniors' and boys' products in the wholesale channel. These improvements were partially offset by lower Signature and U.S. Dockers brand sales.

Net revenues in Europe benefited from the impact of the acquisition of the footwear and accessories business during 2009 and expansion of the company-operated retail network across the region. Revenue gains were partially offset by lower sales in the wholesale channel, reflecting the continued difficult retail environment across the region.

Net revenues in Asia Pacific increased on a reported basis and decreased on a constant currency basis. Growth in the company's developing markets in the region -- driven by brand-dedicated retail store expansion -- was more than offset by lower revenue performance in Japan.

Gross profit in the second quarter increased to $499 million compared with $415 million for the same period in 2009. The company ended the second quarter with cash and cash equivalents of $353 million, an increase of $82 million from November 29, 2009.

"We delivered solid operating results in the second quarter of 2010," said Blake Jorgensen, chief financial officer. "Our cash flow is strong and we continued to build our liquidity position during the quarter. We also successfully completed the refinancing of our 2013 and 2015 debt maturities, as well as a portion of our 2016 Yen Eurobonds, extending our debt maturities and enabling us to focus on driving our growth strategies. As we continue to invest in the business, we remain focused on controlling costs and managing inventories."

Image: Levi's