Levi Strauss has reported net revenues in Europe grew 4% to $275m (£171m) in the last quarter. Operating income for the three-month period to August 24, 2014 increased 8% to $50m (£31m) compared with the same period last year, which the business attributed to the performance and expansion of its retail network and higher gross margins.
Net revenues fell 2% to $697m (£434m) in the Americas and operating profit declined 2% to $122m (£75m), due to lower womenswear wholesale revenues. In Asia, net revenues increased 10% to $171m (£106m) but operating income fell 23% to $17m (£10m), reflecting the highly promotional environment.
“Despite continued external challenges, including soft retail traffic and a highly promotional environment, we grew revenue in the third quarter by focusing on the controllable aspects of the business,” said Chip Bergh, president and chief executive officer. “The decline in net income essentially reflects the investments we’re making to improve productivity. As we enter the fourth quarter, we remain confident in our ability to grow sales and adjusted EBIT this year, as we continue to focus on driving retail conversion, engaging with consumers globally with our Live in Levi’s campaign, and improving the structural economics of our business.”
Overall net revenues increased 1% to $1.15bn (£716m) but third quarter net income declined 11% to $51m, which the company said was due to charges associated with its ‘productivity initiative’, which includes expenses associated with staffing reductions and consulting fees relating to cost saving and procurement projects.
Levi’s said it expects additional savings in future periods to come from streamlining its product development, planning and go-to-market strategies, as well as implementing efficiencies across its supply chain and distribution network, and adopting lower-cost service delivery models.