While net revenue for Q4 increased 3% to $1.6bn, Levi Strauss says it was a challenging year overall.
Alongisde its results announcement, Levi Strauss announced a “global productivity initiative”, called Project FUEL. The two-year scheme is focused on reducing costs and simplifying processes, aiming to save the business a total of $100m in fiscal 2024.
The scheme will see Levi Strauss cut its global corporate workforce by 10-15% in the first half of 2024. Restructuring will cost the company between $110m and $120m in Q1 2024, although it said there may be additional restricting charges as the scheme progresses.
Levi Strauss’ chief financial and growth officer Harmit Singh said: “We achieved a strong Q4 performance, inflecting to growth along with substantial margin expansion, generation of positive free cash flow and closing the year with record net store openings. Looking forward, we are focused on margin execution supported by gross margin expansion and by our global productivity initiative, which gives us clear line of sight to significant annual cost savings.”
Key results for Q4 2023
- Net revenue of $1.6bn, up 3% on a reported basis and 2% on constant-currency basis on Q4 2022.
- 11% increase in direct-to-consumer net revenue, 19% increase in e-commerce net revenue, 2% decrease in wholesale net revenue.
- Net revenue decreased 11% at other Levi Stauss-owned brands.
In Q4, the company also saw an 11% increase in direct-to-consumer net revenues and a 19% increase in net revenue from e-commerce.
While wholesale revenues grew in the US, this was offset by a decline in Europe leading to a 2% decline overall.
Non-Levis brands did not perform as well for Levi Stauss, with net revenue declining 11% overall. Net revenue at Dockers decreased 18%, while revenue at Beyond Yoga increased 14%.
Key results for FY 23
- Net revenue of $6.2bn, flat compared to FY 2022.
- Net income of $250m, adjusted net income of $441m down from $604m in FY 2022.
- Inventories decreased 9% on a reported basis and 17% excluding the impact of new terms with suppliers.
Levi Strauss has agreed new terms with the majority of its suppliers, which has resulted in the company taking ownership of inventory for goods bought into the Americas closer to the shipment.
President and CEO Chip Bergh said in a statement: "I am proud of what we have accomplished over the past twelve years. By putting the Levi’s brand at the centre of culture, we revitalised this iconic brand and transformed our financials putting us in a position where we are stronger today. While 2023 was a challenging year, we ended on a strong note and I am optimistic about the future.”
What next for Levi Strauss in 2024?
President and incoming CEO Michelle Gass said: “We have a strong pipeline of newness and innovation launching this year to fuel consumer demand. And I am confident in the significant growth opportunities ahead for this company, including accelerating international growth, becoming a denim apparel lifestyle business and leading with DTC."
