// Levi’s profits down during fourth quarter
// Net revenues of £1.1 billion declined 2%
// On an adjusted basis, profit was 26 cents a share, down from 30 cents a share a year ago
Levi’s saw its profit drop during the fourth quarter and blamed the decline in sales on the lack of benefit from Black Friday.
For the fourth quarter ended November 24, the retailer saw net revenues of $1.5 billion (£1.1 billion), but declined two per cent on a reported basis and were nearly flat in constant-currency.
Full year net revenues of $5.8 billion (£4.4 billion) grew three per cent on a reported basis, and were up six per cent in constant currency.
Levi’s said the adjusted EBIT margin of 9.3 per cent was “adversely impacted by the lack of a Black Friday benefit”.
In Europe, net revenues grew five per cent on a reported basis and eight per cent on a constant-currency basis, reflecting continued broad-based growth in both direct-to-consumer and wholesale channels across the region.
The region’s operating income grew 47 per cent on a reported basis and 53 per cent on a constant-currency basis, reflecting the net revenues growth and a higher gross margin from direct-to-consumer growth, lower advertising due to a timing shift to earlier in the year, and leverage on base costs.
Meanwhile, net income was down two per cent at $95.8 million (£73 million) for the group, while adjusted net income was down nine per cent, both reflecting lower non-operating income.
On an adjusted basis, profit was 26 cents a share, down from 30 cents a share a year ago.
Operating income for the fourth quarter was $132 million (£100 million) on a reported basis, up two per cent compared to the prior year on a reported basis, as higher net revenues in Europe and Asia were partially offset by higher SG&A expenses associated with the expansion of the company-operated retail network.
“Growth was broad-based by region, channel and category. Underlying fourth quarter organic revenue growth met our expectations in spite of being masked by Black Friday falling in fiscal 2020,” Levi’s president and chief executive Chip Bergh said.
“As we look ahead to 2020 and beyond, we are confident we’ll continue to drive profitable growth over the long-term by executing our strategies.”
Moreover, the retailer has shut about half of its stores in China due to the outbreak of coronavirus and will take a near-term financial hit as a result of the epidemic, chief financial officer Harmit Singh said on Thursday.
This comes a few months after Levi’s opened its largest store in China in the city of Wuhan, the epicenter of the coronavirus epidemic which has killed about 170 people.
Levi’s has also stopped all employee travel in and out of China.