Levi Strauss Sees Substantial Growth in 2018

Levi Strauss & Co., the San Francisco clothing company known for its Levi’s jeans, had a solid year of growth with net revenues increasing a healthy 14 percent in its fiscal year ending Nov. 25, 2018.

“We had an outstanding year with reported net revenues of $5.6 billion, growing 14 percent year-over-year on a reported basis,” said Chip Bergh, president and chief executive of Levi Strauss, in a statement. “It’s clear our strategies to diversify our product portfolio, expand our direct-to-consumer business and deepen our connection with consumers worldwide have worked, resulting in both higher annual revenues and gross margins.”

The company had 74 more company-operated stores at the end of fiscal 2018 than it did the previous year.

While revenue grew in 2018, net income for the fiscal year remained flat at $285 million. That was due to higher operating income, lower interest expense, gains on hedging contracts in the current year as well as a debt refinancing charge in the prior year. This was partially offset by a one-time $143 million tax charge related to the Tax Cuts and Jobs Act.

For the fourth quarter, net revenue grew 9 percent to $1.6 billion with net income declining 17 percent from $116 million the previous year to $97 million this year. Profits were affected by an increase in selling and general and administrative expenses for the fourth quarter, which were $720 million compared with $633 million during the same quarter in 2017. The increase in costs reflected the expansion of the company’s direct-to-consumer business, higher compensation expenses reflecting the company’s stronger performance and higher advertising expenses.

The Americas, which includes the United States and Latin America, still account for more than half of the company’s income. During fiscal 2018, net revenues for the Americas were up 10 percent to $3 billion. A lot of that growth came from sales in the company’s moderately priced Signature and more expensive Levi’s brands and the strong performance of the company’s retail stores.

Levi’s saw its sales in Europe grow 25 percent during 2018 to $1.65 billion with higher income across all channels but was offset by higher advertising costs and higher selling expenses to support growth.

Sales in Asia grew 8 percent to $887 million, reflecting expansion in Levi’s direct-to-consumer business.