Levi Strauss sees revenues drop as it lowers outlook

Levi Strauss & Co. has reported a 9% decrease in revenue to £1 billion ($1.3 billion) for the second quarter ending 28 May 2023.

Wholesale revenue dropped 22%, with growth in Asia and Latin America offset by declines in North America and Europe.

However, direct-to-consumer revenue increased 13%, driven by broad-based growth in both company-operated mainline and outlet stores and e-commerce.

E-commerce increased 20% reflecting double-digit growth across all segments.

In Europe, revenue dropped 2% to £283 million ($361 million), whilst the Americas declined 22% to $478 million ($609 million).

Gross margin was 58.7%, compared to 58.1% in 2022. This was driven by "favourable channel and geographic mix, price increases, lower air freight expenses, and favourable currency exchange, but partially offset by the impact of lower full-price sales and higher product costs".

Net loss totalled £1.5 million ($2 million), compared to net income of £39 million ($50 million) in 2022.

Looking ahead, the company expects revenue to grow between 1.5% to 2.5% against its previous guidance of 1.5% to 3%.

Chip Bergh, President and CEO of Levi Strauss & Co, said:"Our strong Q2 DTC and international results in a challenging environment demonstrate the resilience of our business model and the health of the Levi’s brand globally.

Harmit Singh, Chief Financial & Growth Officer of Levi Strauss & Co, added: "Whilst we are adjusting our full year outlook, we expect H2 revenues up mid-single-digits and a low-double-digit adjusted EBIT margin as strong growth in our large DTC and International businesses continue. As wholesale stabilises and COGS improve, our business model is uniquely positioned to generate significant financial leverage beyond 2023."