LEVI STRAUSS & CO. ANNOUNCES THIRD-QUARTER 2009 FINANCIAL RESULTS
• Levi’s® Brand Global Revenue Up in Constant Currency
• Company Completes Strategic Business Acquisitions
SAN FRANCISCO (October 8, 2009) - Levi Strauss & Co. (LS&Co.) today announced financial results for the third quarter ended August 30, 2009 and filed its third-quarter 2009 results on Form 10-Q with the Securities and Exchange Commission.
Highlights include:
| | Three Months Ended | % (Decrease)
|
| ($ millions) | August 30, 2009 | August 24, 2008 | As Reported |
| Net revenues | $1,040 | $1,111 | (6)% |
| Net income | $41 | $69 | (41)% |
The company’s reported results reflected the challenging global economy and the adverse effect of currency exchange rates compared to the prior year. Net revenues declined 6 percent for the quarter. On a constant currency basis, net revenues decreased 2 percent. Global revenues for the Levi’s® brand increased on a constant currency basis compared to the same period last year.
The company reported a liquidity position of approximately $386 million of cash, cash equivalents and availability under its credit facility. The company’s cash position reflected operating cash flows of $15 million in the quarter.
“It was a productive quarter in light of the tough market conditions worldwide,” said John Anderson, president and chief executive officer. “We invested in our business by completing two acquisitions during the past three months. We are effectively managing our balance sheet and controlling costs. And sales of the Levi’s® brand improved. Our teams are focused on strategies that we believe will build our brands, strengthen our competitiveness and drive future growth. This includes expanding our retail operations and further leveraging the efficiencies and diversity of our global footprint. We’ll also concentrate our investments in the geographic markets that offer the greatest potential for return, and on market-leading innovations that will create great new products.”
Third Quarter 2009 Highlights
- Gross profit in the third quarter decreased to $494 million compared to $532 million for the same period in 2008, primarily due to the effect of currencies. Gross margin for the quarter was essentially flat at 47.5 percent compared with 47.9 percent in the same quarter of 2008.
- Selling, general and administrative expenses for the third quarter increased to $396 million from $389 million in the same period last year. Higher selling costs associated with additional company-operated stores and higher administration expense related to pension and acquisitions costs were largely offset by lower distribution and advertising & promotion costs.
- Operating income for the third quarter decreased to $98 million compared to $144 million for the same period of 2008, largely due to continued costs of retail expansion and unfavorable currency impact.
Regional Overview
Regional Net Revenues for the quarter were as follows:
| | | | % Increase (Decrease) |
| Net Revenues ($ millions) | August 30, 2009 | August 24, 2008 | As Reported | Constant Currency |
| Americas | $616 | $649 | (5)% | (3)% |
| Europe | $266 | $306 | (13)% | (2)% |
| Asia Pacific | $158 | $156 | 2% | 4% |
- The decrease in net revenues in the Americas region reflected the weak economic environment, including the impact of lower demand for men’s casual pants in our Dockers® brand and lower sales of Signature products. These were partially offset by increased Levi’s® brand sales and additional retail revenues from the company’s expanding retail network, including 73 U.S. outlet stores acquired during the period.
- Net revenues in Europe decreased primarily due to the unfavorable impact of currency and the region’s weak retail environment. Excluding the effect of currency, lower revenues mostly reflected the declining performance of Levi’s® Red Tab™ products for women in the wholesale channel. The decline was partially offset by increased sales from the company’s expanding retail network.
- The increase in net revenues in Asia Pacific was driven by increased product promotions and continued retail store expansion, particularly in India and China. The revenue improvements were partially offset by declines in wholesale channel sales in some mature markets, particularly in Japan, where weak consumer spending and a consumer shift to lower-priced retailers continued.
Balance Sheet and Cash Flow
The company ended the third quarter with cash and cash equivalents of $172 million and available liquidity of $214 million under the company’s credit facility. During the period, the company made business acquisitions in its Americas and Europe regions. Cash provided by operating activities was $174 million for the nine-month period, compared with $151 million for the same period in 2008. Net debt at the end of the quarter was $1.7 billion compared to $1.8 billion at the end of the third quarter of 2008.
Investor Conference Call
The company’s third-quarter 2009 investor conference call will be available through a live audio Webcast at www.levistrauss.com/Financials/EarningsWebcasts.aspx today, October 8, 2009, at 1 p.m. PDT/4 p.m. EDT. A replay is available on the Web site the same day and will be archived for one month. A telephone replay also is available through October 15, 2009 at 800-642-1687 in the United States and Canada, or 706-645-9291 internationally; I.D. No. 32536181.
This news release contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current assumptions, expectations and projections about future events. We use words like “believe,” “will,” “so we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Investors should consider the information contained in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended 2008, especially in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this news release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this news release. We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this news release to reflect circumstances existing after the date of this news release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.
Investor Contact:
Roger Fleischmann
Levi Strauss & Co.
(800) 438-0349
Media Contact:
Jeff Beckman
Levi Strauss & Co.
(415) 501-7777