On June 26, 2024, Levi Strauss & Co (LEVI, Financial) released its 8-K filing for the second quarter of 2024, showcasing notable financial achievements and overcoming several challenges.
Levi Strauss & Co is involved in designing, marketing, and selling products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear, and related accessories directly or through third parties and licensees for men, women, and children under Levi's, Dockers, Signature by Levi Strauss & Co., and Denizen brands. The company manages its business according to three regional segments: the Americas, Europe, and Asia.
Performance and Challenges
Levi Strauss & Co (LEVI, Financial) reported net revenues of $1.4 billion, an 8% increase on a reported basis and 9% on a constant-currency basis compared to Q2 2023. This growth was driven by a 17% increase in the Americas and a 10% increase in Other Brands. However, Europe saw a 2% decline, and Asia's revenues remained flat on a reported basis but grew 6% in constant currency.
Despite these gains, the company faced challenges, including a $100 million shift in wholesale shipments due to the U.S. ERP implementation and the exit of the Denizen® business. Adjusting for these factors, net revenues would have been up 1% year-over-year.
Financial Achievements
Levi Strauss & Co (LEVI, Financial) achieved a record gross margin of 60.5%, up 180 basis points from the previous year, primarily due to lower product costs and a favorable mix shift. The company's direct-to-consumer (DTC) channel also saw an 8% increase in net revenues, with e-commerce revenues growing by 19%.
Income Statement Highlights
The company reported a diluted EPS of $0.04 and an adjusted diluted EPS of $0.16, exceeding analyst estimates of $0.11. Net income was $18 million, a significant improvement from a net loss of $2 million in Q2 2023. Adjusted net income was $66 million, up from $15 million in the same period last year.
Balance Sheet and Cash Flow
As of May 26, 2024, Levi Strauss & Co (LEVI, Financial) had cash and cash equivalents of $641 million and total liquidity of approximately $1.4 billion. Total inventories decreased by 7%, reflecting improved inventory management.
Shareholder Returns
The company returned approximately $65 million to shareholders in the second quarter, including $48 million in dividends and $17 million in share repurchases. Levi Strauss & Co (LEVI, Financial) also declared an 8% increase in the quarterly dividend to $0.13 per share.
Project Fuel and Future Outlook
Levi Strauss & Co (LEVI, Financial) continues to implement its global productivity initiative, Project Fuel, transitioning to a more balanced distribution and logistics network. This strategic shift aims to enhance the company's omni-channel experience and service quality.
The company reaffirmed its fiscal 2024 guidance, expecting net revenues to grow by 1% to 3% year-over-year and adjusted diluted EPS to be between $1.17 and $1.27.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Levi Strauss & Co for further details.
