Levi’s Sees Solid Revenue Growth in the Third Quarter

Manufacturing

As of Thursday, October 11, 2018

Levi Strauss & Co. has been on a roll lately, reporting its fourth consecutive quarter of double-digit revenue growth.

In a conference call about the San Francisco clothing company’s third-quarter earnings, company executives noted that business grew for all four of the company’s brands and in all categories.

“Our strategy to diversify the business continued with strong results,” said Chip Bergh, Levi’s president and chief executive. “Globally, we are selling a T-shirt every second, and we have done so for the last two years.”

Levi’s net income for the third quarter ending Aug. 26 grew 45 percent to $130 million while its revenues inched up 10 percent to $1.4 billion. Net income growth came from primarily lower income taxes, higher operating income and gains on the company’s hedging contracts compared with losses in the third quarter of 2017.

The strongest market for Levi’s was the Americas, where revenues rose 7 percent to $793 million. Direct-to-consumer business in the Americas was up 13 percent.

Europe was the company’s second-largest market, where revenues were up a solid 17 percent to $406 million. Strong sales were seen in the women’s category and tops. Direct-to-consumer business grew 15 percent.

Asia’s revenues jumped 8 percent to $196 million.

Of the company’s four brands—Levi’s, Signature by Levi Strauss & Co., Denizen and Dockers—Dockers has been the most challenging in sales growth. But the brand is gaining a bit of speed and saw revenues rise 2 percent in the third quarter.

“Dockers was driven by setting the floors in the United States and strong performance in Europe,” Bergh said, noting that the launch last year of the Dockers Smart Flex 360 pant with four-way stretch fabric has boosted sales. “The reception from our customers has been positive.”

Harmit Singh, the company’s chief financial officer, noted that Levi’s has 65 more stores today than it did one year ago. In June, the company opened a flagship store in downtown Toronto, and it is on schedule to debut a flagship store in New York City’s Times Square by the end of the year.

The company now has RFID, or radio-frequency identification, in all its U.S. stores to manage inventory more effectively and hopes to expand that globally and with its franchise partners within the next 12 months.

The San Francisco company has been busy developing new marketing and advertising campaigns and partnering with influencers. Levi’s recently launched its second Air Jordan collaboration with two exclusive sneakers and two jackets, which Bergh said sold out online in minutes, and it recently announced a collaboration with celebrity Justin Timberlake for a 20-piece collection of menswear.

Levi’s also partnered with the nonprofit Rock the Vote for a TV campaign that plays Aretha Franklin’s song “Think” in the background to get more young people to vote on election day. “These things will keep the brand at the center of culture,” Bergh said.