For Q1, Levi saw net revenues decline from $1.689bn in 2023 to $1.56bn in 2024, 8% lower on both a reported and constant-currency basis. Levi said this was primarily due to a shift in wholesale shipments from Q2 to Q1 2023 caused by its ERP implementation in the US.
Levi said the change negatively impacted Q1 2024 by approximately $100m or 6% of net revenue compared to Q1 2023.
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Additionally, the brand claimed that excluding the impact of the exit of the Denizen business and the closure of its Russia business, net revenues would have been flat compared to Q1 2023.
GlobalData’s retail analyst, Pippa Stephens told Just Style that the Q1 results for Levi were “disappointing”. She added: “Even though this decline was caused by the shift of wholesale shipments from Q2 to Q1 in 2023, the discontinuation of its Denizen brand and its exit from Russia, without these impacts, sales still would have been flat versus the prior year, highlighting how it is struggling to encourage sales amid the tough economic climate.”
Key results for Levi in Q1 2024
- Net revenue of $1.6bn, 8% lower on both a reported and constant-currency basis versus Q1 2023.
- Adjusted EBIT decreased 24% on a reported basis and 23% on constant-currency basis from last year’s $185m to $141m.
- Operating loss of $0.4m, compared to an income of $157.4m in Q1 of 2023.
In the Americas, net revenues decreased 11% on a reported and constant-currency basis for Levi. However, once adjusted for the shift in wholesale shipments and the exit of the Levi’s Denizen business, both the Americas and the US saw revenue increase 2%.
In Europe, net revenue decreased 7% on a reported basis and 8% on constant-currency basis. Adjusting for the impact of closing Levi’s Russia business, net revenues still decreased 5% on a constant-currency basis.
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By GlobalDataAsia net revenues were in line with prior year on a reported basis and up by 5% on constant-currency basis, on top of 22% growth in the prior year, reflecting growth across most markets.
Levi’s operating loss in Q1 2024 was $0.4m, compared to an operating income of $157.4m in Q1 of 2023.
Levi also incurred a net loss of $11m compared to a net income of $115m in Q1 2023. While Levi’s adjusted net income fell from $135m to $103m compared to the same period last year.
What do the results mean for Levi Strauss & Co?
GlobalData’s Stephens said that the current economic environment is putting Levi in a difficult position as consumers continue to tighten their belts. She told Just Style: “With its products primarily consisting of classic, long-lasting styles, consumers can easily hold off making new purchases while their budgets are squeezed, hindering the brand’s growth.”
However, Michelle Gass, president and CEO of Levi, who took over the role in January 2024, said in a statement that “newness and strength” in the company’s core offerings are fueling consumer demand and driving “meaningful market share gains”.
Gass added: “We started the year strong delivering results above expectations, underscoring the power of the Levi’s brand and the progress we are making on our strategic priorities.”
Gass also highlighted the strength of Levi’s direct-to-consumer (DTC) business. She added: “We are on our way to transforming this company into a best-in-class DTC-first apparel retailer, setting the stage for our next phase of sustainable profitable growth.”
Harmit Singh, chief financial and growth officer at Levi, said: “The structural economics of our business improved in Q1 driven by significant gross margin expansion, disciplined expense controls and efficient working capital management.”
Singh added that Levi is “confident” in its ability to return to “topline to mid-single-digit growth” in the second half of 2024, as the company increased its full year expectations.
Earlier this year, Levi announced plans to reduce its global workforce by 10-15% in 2024, after a challenging FY23.
Moreover, the brand was also at the brunt of a controversy recently, when the workers of a Levi Strauss & Co supplier in Türkiye were alleged to have faced harassment and dismissal for choosing their own union representatives.
