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Levi's blames IPO for slow second half

US denim brand Levi Strauss has reported a 63% year-on-year drop in net profit to $29m (£23.2m) for the three months to 26 May.

It said the drop was primarily a result of $29m (£23m) of costs associated with the company’s initial public offering (IPO), which it announced in February.

Net revenues meanwhile grew 5% year on year to $1.3bn (£1bn) in the second quarter. Europe accounted for $398m (£318m) – up 9% compared with the same period last year – the US for $693m (£554m) and Asia for $222m (£177m).

In the first half (six months to 26 May), group operating profit rose by 5% year on year to $264m (£211m).

Selling, general and administrative expenses rose to $1.2bn (£975m) however, which Levi’s said “reflects the growth and expansion of [its] direct-to-consumer business.”

President and CEO Chip Bergh added: “In our second quarter and first half, we delivered broad-based growth across all brands, regions and key product categories despite a challenging retail and macroeconomic environment.

“For both periods, the Levi’s brand grew in all three regions across men’s, women’s, tops and bottoms.”

Levi’s said it expects full-year net revenue growth to be at the high end of the mid-single-digit range, warning that it will miss out on the “benefit” of Black Friday because of the timing of its financial year.

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