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Levi’s increases European prices to offset strong dollar

Levi’s has increased prices in Europe after exchange rates hit its sales and operating profit by $56m (£36m) and $11m (£7m) respectively during the three months to May 31.

European sales fell 15% to $222m (£142m), while operating profit fell 12% to $33m (£21m).

But, excluding the currency effects, sales grew by 8% and operating income by 24% thanks to the expansion of its company-operated retail network.

Chief executive Chip Bergh said the strong US dollar had hit Levi’s harder than expected.

The business has put up prices in Europe and introduced a second round of price increases in Russia to make up for the revenue gap. The details have not yet been disclosed.

Overall the company reported sales fell by 6% to £1bn on a reported basis and grew by 1% on a constant currency basis. Lower sales in wholesale, primarily in the Americas, were offset by increased sales in the retail network in Europe and Asia.

Levi’s said it is continuing its “global productivity initiative”, which aims to generate annual cost savings of $175m to $200m (£112m to £128m) once fully implemented.

In May US brand house Ralph Lauren Corporation also said it would increase prices in Europe and other international regions in a bid to counteract the strong dollar.

Jacki Nemerov, president and chief operating officer, said: “While foreign exchange and global consumer spending remain unpredictable, we are taking decisive actions to offset some of these ongoing external pressures.” The group announced a 19% fall in sales during its fourth quarter on May 13.

Drapers has contacted both Levi’s and Ralph Lauren for comment.

@Tara_Hounslea

 

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