Levi Strauss & Co reports stagnant profits amid unfavourable conditions

Levi Strauss and Co has announced its gross profits for the three months ended 28 August 2022 were up by 0.08% year on year to $862.9m (£775.6m), with unfavourable currency exchanges, higher product costs and lower full-priced sales marked as the main barriers faced by the company.

As a result, for the nine months ended 28 August 2022 gross profits were up 12.2% from $2.37bn (£2.13bn) to $2.66bn (£2.29bn).

It also announced a 19% fall in net revenues for its European business unit to $390m (£350m) in the quarter, compared to the same period in 2021.

European direct-to-consumer net revenues fell by 21% on a reported basis and 14% on a constant-currency basis, while the company’s wholesale net revenues decreased 16% on a reported basis and 5% on a constant-currency basis.

Net revenues for the company’s digital channels fell by 18% and represented 24% of the segment’s sales in the three months to 28 August 2022. Total group net revenues were up by 1%, compared to the third quarter of 2021, driven by strong performance in the Americas and Asia.

Looking forward, the retailer has lowered its net revenue growth guide from around 12% to between 6.7% and 7% for the fiscal year ending 28 November 2022, as a result of the cost-of-living crisis.

President and chief executive officer Chip Bergh said: “Despite a more challenging environment, we delivered solid third quarter results. The Levi’s brand grew 6% in constant-currency, hitting a 10-year record third quarter sales result.

“While we expect the macroeconomic backdrop to remain unpredictable over the next few quarters, our strong brands, diversified business model and proven team position us to deliver on our long-term objectives. We have separated ourselves from the competition by making the right moves in challenging times, and this environment is no different. We will operate with discipline and lean into our strengths to further expand our lead for the years to come.”