Levi’s posts $11m loss despite increase in DTC revenue

Denim brand Levi Strauss and Co has reported a net loss of $11m (£8.71m) in Q1 2024 compared with net income of $115m (£91.09m) in the prior year. The group’s net revenue also decreased 8% to $1.6bn (£1.27bn) in Q1 2024 primarily due to the shift in wholesale shipments from Q2 to Q1 2023 from the U.S. ERP implementation. This shift negatively impacted Q1 2024 over 2023 by approximately $100m (£79.21m) or 6% of net revenues. In the Americas, net revenues decreased 11% on a reported and constant-currency basis. Adjusting for the shift in wholesale shipments and the exit of the Denizen business, both the Americas and the U.S. were up 2%. Meanwhile, in Europe, net revenues decreased 7% on a reported basis and 8% on a constant-currency basis; factoring out the impact of the Russia business, net revenues decreased 5% on a constant-currency basis. However, Asia net revenues were in line with prior year on a reported basis and up 5% on a constant-currency basis, on top of 22% growth in the prior year, reflecting growth across most markets. Despite reporting a loss, Levi’s DTC (Direct to Consumer) net revenues increased 7% on a reported basis and 8% on a constant-currency basis. DTC growth exceeded total net revenues growth in all segments, including a 10% increase in the US and a 4% increase in Europe, excluding Russia. Other Brands net revenues also decreased 10% on both a reported and constant-currency basis. Additionally, wholesale net revenues declined 18% on a reported basis and 19% on a constant-currency basis and global wholesale net revenues were down 9%. Revenues from e-commerce also grew 13% on a reported basis and 12% on a constant-currency basis reflecting double-digit growth across the Levi’s and Beyond Yoga brands. The group also recorded its operating margin of (0.03)% was down from 9.3% in Q1 2023 as a result of the restructuring charges taken in the current quarter related to our cost savings initiative, Project Fuel. Adjusted EBIT margin also declined 200 basis points to 9.0% from 11.0% last year on a reported basis due to lower net revenues. Michelle Gass, president and CEO of Levi Strauss and Co, said: “We started the year strong delivering results above expectations, underscoring the power of the Levi’s brand and the progress we are making on our strategic priorities. Both newness and strength in our core offerings are fueling consumer demand and driving meaningful market share gains. “The momentum in our global DTC business continues, with DTC up in all segments. Our efforts to stabilise our wholesale business are delivering results. We are on our way to transforming this company into a best-in-class DTC-first apparel retailer, setting the stage for our next phase of sustainable profitable growth.”