Levi’s faces challenges in Q3

Apparel group Levi Strauss & Co announced on Tuesday that sales for the third quarter dipped 2 percent to $1,023 million. The company blamed slow sales in Japan and a “challenging European market” for the decline. Chief executive officer Phil Marineau said the company was addressing the challenges and pointed out that he is “pleased with the US Levi’s and Dockers performance and the improving trends in Europe .”

The decrease overshadowed news of the rise in net income of 29 percent to $49 million and a 14 percent gain in operating income thanks to a one-off $29 million benefit related to the planned closing of a US distribution center. “We improved our profitability and cash flow, our primary objective for this year,” Marineau said in a conference call with analysts. “This allowed us to reduce our net debt.” He said the company’s second objective was to improve and strengthen the retail network in Europe and to build on the momentum in the Asia-Pacific region.

Revenues for the quarter ended 27 August fell 1.3 percent to £1.02 billion. Sales dropped 1.5 percent to $1 billion, while licensing revenues gained 9.2 percent to $19.3 million. Sales of the Levi’s brand slid 1 percent to $345.1 million, while sales of the Dockers brand in the US rose 2.8 percent to $175.1 million.

“We delivered solid operating income, even as we invested in our business,” said Hans Ploos van Amstel, chief financial officer. “Better working capital management and cost discipline helped contribute to our bottom line. We expect to see stable revenues in the fourth quarter.”

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