For the first fiscal quarter ended March 1, 2015, denim jeans marketer Levi Strauss & Co. reported a 7 per cent year over decline in net sales due to lower revenues in wholesale and retail in the Americas.
Levis said its net sales slipped 7 percent in the first quarter of fiscal 2015 to $1,055 million as against $1,130 million in the first fiscal quarter ended February 23, 2014.
On a reported basis, gross profit in the first quarter fell to $537 million compared with $576 million for the same quarter of 2014.
Gross margin for the reporting quarter too decreased marginally to 50.9 per cent of revenues from 51.0 per cent of revenues in the prior year first quarter.
“Excluding $35 million in unfavourable currency translation effects, gross margin improved 30 basis points, primarily due to lower negotiated product costs and a streamlined supply chain,” it added.
SG&A expenses for the first quarter of fiscal 2015 at $425 million were flat compared with the same quarter of fiscal 2014, as currency favourably impacted SG&A by $22 million.
Excluding currency, earlier timing of advertising investment and higher costs were partially offset by savings realised from the company's global productivity initiative.
Adjusted EBIT, which excludes the charges associated with the company’s global productivity initiative, was $120 million, down from $159 million in the same quarter of 2014.
Operating income of $107 million quarter under review was however up from $94 million in the same quarter of 2014 primarily from lower restructuring charges associated with global productivity initiative.
At March 1, 2015, cash and cash equivalents of $203 million were complemented by $717 million available under the revolving credit facility, resulting in a total liquidity position of around $920 million.
Net debt at the end of the first quarter remained at $0.9 billion, while free cash flow through the first quarter of 2015 was $12 million.
“As anticipated, unfavourable currency effects significantly impacted our revenues and adjusted EBIT in the first quarter,” said Chip Bergh, president and chief executive officer.
“The health of our business remains strong and the savings generated from our improving structural economics helped to fuel our D-to-C growth initiatives and investments to generate consumer demand,” he added.
“While the second quarter will again be a difficult comparison to the prior year, we remain confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis,” he noted.
