Levi Strauss & Co net revenue of $1.4bn for its second quarter (Q2) ended 26 May 2024 was 8% higher on a reported basis and 9% higher on a constant-currency basis compared to Q2 2023.
The company's Direct to Consumer (DTC) net revenues increased 8% on a reported basis and 11% on a constant-currency basis. It explained its DTC growth reflected a 12% increase in the US and a 7% increase in Europe.
President and CEO of Levi Strauss & Co. Michelle Gass said the pivot to DTC gives her "great confidence that we will achieve accelerated, profitable growth for the rest of the year and beyond.”
She continued: “We delivered another strong quarter driven by the Levi’s brand's prominence at the centre of culture, a robust pipeline of newness and innovation, and continued momentum in our global direct-to-consumer channel. Our amplified focus on women’s and denim lifestyle is delivering outsized growth and driving meaningful market share gains."
Revenues from ecommerce grew 19% on a reported and constant-currency basis, reflecting double-digit growth across the Levi’s and Beyond Yoga brands. DTC comprised 47% of total net revenues in the second quarter.
In the Americas, net revenue increased 17% on a reported basis and in Europe net revenues decreased 2% on a reported basis. Asia net revenues were roughly in line with prior year on a reported basis.
Its other brands' net revenues increased 10% on both a reported and constant currency basis.
Levi Strauss & Co wholesale net revenues grew 7% on a reported basis and 8% on a constant-currency basis. Adjusting for the approximate $100m shift in wholesale shipments from the US ERP implementation from Q2 to Q1 2023 and the exit of the Denizen business, global wholesale net revenues decreased 4% to prior year, reflecting sequential improvement from Q1.
Operating margin was 1.5% compared to 0.7% in Q2 2023 and its net come was $18m compared to a net loss of $2m in the same period last year.
“We are pleased to have delivered earnings that significantly exceeded expectations for a second consecutive quarter. The structural economics of our business continue to strengthen driven by record gross margins resulting in improved profitability across both DTC and wholesale and lower than expected inventory,” said Harmit Singh, chief financial and growth officer.
Levi Strauss Q2 key results
- Net revenue for Q2 was $1.4bn, an 8% increase on a reported basis
- Adjusted EBIT margin increased 360 basis points to 6% from 2.4% last year on a reported basis also primarily due to higher net revenue and gross margin.
- Net income was $18m compared to a net loss of $2m in Q2 2023. Adjusted net income was $66m compared to $15m in Q2 2023.
Levi Strauss 2024 outlook
- Levi reaffirms reported net revenues are expected to be up 1% to 3% year-over-year
- Adjusted diluted EPS is expected to be between $1.17 to $1.27, inclusive of a 5-cent adverse impact to EPS attributable to our new distribution and logistics strategy, increased marketing spend in H2, and incremental FX headwinds.
