Net revenues slipped 6 per cent year over year on a reported basis at denim jeans marketer Levi Strauss & Co. for the second quarter ended May 31, 2015.
Net revenues declined six per cent to $1.01 billion on a reported basis in the second quarter of fiscal 2016 from $1.08 billion in the corresponding quarter of fiscal 2015.
“However, sales for the reporting period grew one per cent year on year on a constant-currency basis,” Levis said in a press release.
“Lower sales at wholesale, primarily in the Americas, were offset by increased sales from the retail network in Europe and Asia,” it added.
On a reported basis, gross profit in the second quarter of fiscal 2016 dipped to $500 million compared with $530 million for the same quarter of fiscal 2015.
Gross margin for the quarter under review however, grew to 49.4 per cent of revenues as against 49.0 per cent of revenues in the second quarter of prior fiscal.
Excluding $43 million in unfavourable currency translation effects, gross margin improved 80 basis points, primarily due to lower negotiated product costs and a streamlined supply chain.
SG&A expenses amounted to $450 million, up $4 million from the corresponding quarter of previous fiscal, from favourable currency impact of $29 million.
Excluding currency, higher costs reflected the expansion of the company's retail network and ecommerce business as well as earlier timing of advertising investment.
Adjusted EBIT, which excludes the charges associated with the company’s global productivity initiative and debt refinancing reached $63 million, down from $93 million in the same quarter of last fiscal.
Operating income of $48 million in the reporting period was down from $65 million in the same quarter of fiscal 2015 reflecting lower adjusted EBIT and lower restructuring charges.
Net income was impacted by a $14 million loss on debt retirement in conjunction with the April refinancing of notes scheduled to mature in 2020.
As on May 31, 2015, cash and cash equivalents of $285 million were complemented by $533 million available under the revolving credit facility, resulting in a total liquidity position of around $818 million.
Net debt at the end of the second quarter remained at $0.9 billion, while free cash flow through the second quarter of fiscal 2016 was $8 million.
“In an environment that continues to be challenging, we were pleased to grow second quarter revenues on a constant-currency basis, due to our strong results in Europe and Asia,” said CEO Chip Bergh.
“We continue to focus on what we can control, and make investments to generate consumer demand,” he too added.
“As we move into the second half of 2015, we remain confident in our ability to grow full-year salesand adjusted EBIT on a currency-neutral basis,” Bergh informed.
