Levi’s sees DTC revenues rise driven by "strong comp-store gains”

Levi Strauss & Co, the parent company of Levi’s, Dockers and Beyond Yoga, revealed its Q3 revenues for the period ending 27 August 2023 were in line with expectations.

The US-based company's net revenue sat at £1.2 billion ($1.5 billion), consistent with the prior year on a reported basis.

Direct-to-consumer net revenue increased 14% on a reported basis, driven by broad-based growth in both company-operated mainline and outlet stores and e-commerce. Revenues from e-commerce grew 19% and DTC made up 40% of total net revenue.

Wholesale revenue declined 8% on a reported basis as growth in Asia and Latin America was offset by declines in North America and Europe.

Other brand revenue increased 12% on a reported basis, with Dockers up 9% and Beyond Yoga up 25%.

The financial report also included the following results:

• Operating margin of 2.3% was down from 13.1% in Q3 2022.
• Adjusted EBIT margin declined 330 basis points to 9.1%.
• Gross margin was down 130 basis points to 55.6%.
• Net income was £8.1 million ($10 million) compared to net income of £141 million ($173 million) in Q3 2022.

Looking ahead, the company expects reported net revenues to remain flat, up by 1% year-on-year.

Chip Bergh, President and CEO of Levi Strauss & Co, said: "As we look longer term, we remain confident in our ability to achieve our goals given the global strength of the Levi’s brand, the momentum in our direct-to-consumer business globally, and the exceptional growth potential of our product portfolio and our international business."

Harmit Singh, Chief Financial and Growth Officer at Levi Strauss & Co, added: "While we saw sequential improvement in the business across the company as we moved through Q3 with both July and August up versus prior year, given the ongoing uncertainty in the macro environment, we are taking a cautious approach to our outlook for the fourth quarter.

"As we accelerate our transition to a DTC-led company, we have commenced an initiative to review our operating model and cost structure that should drive agility and material cost savings beginning in 2024."