Levi’s had one if its best top line results in years, but currency woes hit net income for the fourth quarter and full year.
In a Nutshell: Notching its best revenue gains in quite a while, Levi Strauss & Co. saw direct-to-consumer revenues grew 20 percent for the fourth quarter and 15 percent for the full year on strong global performance and expansion of the retail network, as well as e-commerce growth. The company had 53 more company-operated stores at the end of fiscal 2017 than it did at the end of fiscal 2016. Earnings for the full year dipped, however, in part over currency losses on soft dollar exchange rates.
Sales: Net revenue for the San Fransisco-based denim giant rose 13 percent for the fourth quarter ended Nov. 26 to $1.3 billion, with revenue for the full year increasing 8 percent to $4.9 billion. Wholesale revenues grew 10 percent for the fourth quarter, reflecting higher revenues from the Americas and Europe, and were up 5 percent for the full year, primarily reflecting growth in Europe. In Asia, net revenues grew 13 percent, reflecting direct-to-consumer expansion and performance.
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Earnings: Fourth quarter net income increased 20 percent to $116 million, primarily reflecting higher earnings before interest and taxes, and lower taxes due to additional net foreign tax credits, as well as the favorable impact of foreign operations as compared to 2016. Full-year net income declined 3 percent to $291 million, primarily due to a $23 million loss on early extinguishment of debt as a result of debt refinancing activities this year and net losses on foreign exchange contracts, reflecting the appreciation of most foreign currencies against the dollar during the year.
CEO’s Take: Chip Bergh, president and chief executive officer, said: “Our growth and momentum accelerated in the fourth quarter, capping the strongest revenue year the company has had in more than a decade. Our strategies are working and the investments that we’ve made to diversify our business over the past few years are paying off, best demonstrated by the strength of the Levi’s brand globally.”
