NEW YORK – Levi Strauss & Co. Tuesday reported sharply higher profits on stronger sales during the first quarter.
While profits were helped by a one-time $25 million gain from the curtailment of a benefit plan related to the closure of a US distribution center, a lower tax rate and favorable currency translation, the bulk of the 61% advance in net income was from higher sales, a shift towards higher-end products and growth in smaller markets. Levi’s indicated that Levi’s brand products grew in all geographic regions, but cited Japan and the Signature business in the US as soft spots.
During the three months ended Feb. 25, net income grew to $86.6 million from $53.8 million in the first quarter of last year.
Net revenues were up 7.2% to $1.04 billion from $967.6 million. Sales picked up the same percentage to $1.02 billion and licensing revenue accelerated 6.8% to $21.1 million.
Gross margins were down fractionally to 49.0% of sales from 49.1% a year ago.
“We’re off to a good start this year,” said John Anderson, chief executive of the San Francisco-based jean giant. “Our sales grew for the second consecutive quarter, reflecting a broad-based improvement worldwide. Our premium products are doing well with consumers in many markets.
“At the same time,” he continued, “some businesses, including Japan and the U.S. Levi Strauss Signature brand, need considerable improvement.”
Hans Ploos van Amstel, chief financial officer, noted, “We are delivering more profit to the bottom line as a result of our lower debt, and lower interest and tax rates. In addition, we will continue to focus on ensuring our cost structure is competitive.”
Total liabilities dropped to $3.67 billion from $3.80 billion a year ago.