Levi Strauss & Co has published its financial results for the fourth quarter and fiscal year ending 26 November 2023. Despite a “challenging year”, the revitalised brand ended on a “strong note” and remains optimistic about the future.
Financial highlights for the fourth quarter:
- Net revenues of £1.2 billion ($1.6 billion) increased 3% on a reported basis and 2% on a constant currency basis.
- Direct-to-consumer net revenues increased 11% on a reported basis and 10% on a constant-currency basis.
- Wholesale net revenues declined 2% on a reported basis and 3% on a constant-currency basis.
- In the Americas,
- Net revenues increased 6% in the Americas and 4% in Asia, while Europe saw net revenues rise 2% on a reported basis.
- Operating margin of 9.2% was up from 8.6% in Q4 2022.
- Gross margin and adjusted gross margin expanded 200 basis points to 57.8% from 55.8% in Q4 2022.
Harmit Singh, Chief Financial and Growth Officer, said: “We achieved a strong Q4 performance, inflecting to growth along with substantial margin expansion, generation of positive free cash flow and closing the year with record net store openings.
“Looking forward, we are focused on margin execution supported by gross margin expansion and by our global productivity initiative, which gives us a clear line of sight to significant annual cost savings.”
Financial highlights for the full year:
- Reported net revenues of £4.8 billion ($6.2 billion) were flat.
- Gross margin was 56.9% and adjusted gross margin was 56.9%, 70 basis points below FY22.
- Operating margin was 5.7%.
- Net income was £196 million ($250 million) and adjusted net income was £346 million ($441 million), down from £474 million ($604 million) the previous year.
Looking ahead to FY24, the company expects reported net revenue growth between 1-3% year-over-year.
This outlook also assumes no significant worsening of macroeconomic pressures on the consumer, inflationary pressures, supply chain disruptions, or currency impacts.
Chip Bergh, who is soon to step down from his role as President and CEO of Levi Strauss & Co, said: “I am proud of what we have accomplished over the past twelve years.
“By putting the Levi’s brand at the centre of culture, we revitalised this iconic brand and transformed our financials putting us in a position where we are stronger today.
“While 2023 was a challenging year, we ended on a strong note and I am optimistic about the future. I couldn’t be more confident in Michelle as my successor, and together with the rest of our team, they position the company to thrive in its next phase of growth.”
Michelle Gass, President and incoming CEO, added: “We have a strong pipeline of newness and innovation launching this year to fuel consumer demand. I am confident in the significant growth opportunities ahead for this company- including accelerating international growth, becoming a denim apparel lifestyle business, and leading with DTC.
“The success of these strategic initiatives drove our growth in the fourth quarter and positioned us to create outsized long-term shareholder value in the years ahead.”