Levi’s profits fall 9% despite surge in revenues

Levi’s has revealed its gross profit fell 9% to $887m (£716m) for the year 27 November 2022.

However, it also reported a 7% year on year increase in revenue to $6.2bn (£5bn) (12% on a constant-currency basis). Net revenue of $1.6bn (£1.29bn) in the fourth quarter represented a 6% year-on-year drop “as strong growth in the direct-to-consumer [DTC] channel offset a decline in wholesale”, the company said.

In Europe, net revenues decreased 18% on a reported basis (8% on a constant-currency basis), including a 4% negative impact from the suspension of the company’s business in Russia.

In the Americas, net revenues fell 5% on both reported and constant-currency bases, as growth in the DTC business was offset by a decline in the wholesale channel. DTC net revenues increased 7% driven primarily by higher traffic and sales in company-operated stores in the US.

In Asia, net revenues increased 1% on a reported basis (17% on a constant-currency basis), driven by both wholesale and DTC channels, and in most markets outside China.

Looking ahead, Levi’s predicted an increase in net revenue in the range of 1.5% to 3% for the current 2022/23 financial year.

Chip Bergh, president and chief executive officer of Levi Strauss and Co, said: “We continue to make progress against our strategic priorities, positioning us for further success in 2023. Our high-margin direct-to-consumer business is delivering exceptional results and our diversification efforts provide additional growth drivers for sustainable long-term growth.”