Levi Strauss Reports Mixed Q3 Results Amid Ongoing Market Challenges

Levi Strauss & Co. reported its financial results for the third quarter and the nine months ended August 25, 2024, showing mixed performance amid ongoing market challenges. The company achieved net revenues of $1,516.8 million for the three months, a slight increase of 0.4% compared to $1,511.0 million in the same period last year. For the nine months, revenues decreased by 0.5% to $4,515.6 million from $4,536.7 million in the prior year. The growth in the Direct-to-Consumer (DTC) channel, which saw a 9.9% increase in the third quarter, was offset by a decline in wholesale revenues, which fell by 6.0% in the same period.

Gross profit for the third quarter rose to $910.7 million, an increase of 8.5% from $839.5 million a year earlier, driven by lower product costs and a favorable brand mix. However, total Selling, General and Administrative (SG&A) expenses increased to $765.6 million, up 7.4% from $713.0 million, primarily due to expansion in the DTC business and restructuring charges related to the company's Project Fuel initiative.

Operating income for the third quarter was $30.3 million, down from $34.8 million in the prior year, largely due to higher impairment charges. Net income for the quarter was $20.7 million, a significant increase from $9.6 million in the same period last year. However, net income for the nine months ended August 25, 2024, fell sharply to $28.0 million from $122.7 million in the previous year, reflecting the impact of restructuring charges totaling $174.7 million.

The company’s balance sheet showed total assets increased to $6,253.5 million from $6,053.6 million at the end of the previous fiscal period. Cash and cash equivalents rose to $577.1 million, up from $398.8 million. However, total liabilities also increased to $4,380.4 million from $4,007.2 million, with current liabilities rising to $1,946.1 million.

Strategically, Levi Strauss completed the acquisition of operating assets related to its brands from Expofaro S.A.S for $31.9 million in December 2023, which included 40 retail stores and an e-commerce site. The company has also initiated a formal review of strategic alternatives for the Dockers® brand, potentially leading to a sale or other strategic transaction, with Bank of America retained as the financial advisor.

Overall, while Levi Strauss experienced growth in certain areas, the company faced significant challenges, including restructuring costs and market pressures, impacting its profitability and revenue performance.