SAN FRANCISCO – Levi Strauss & Co. (LS&Co.) today announced financial results for the fourth quarter and fiscal year ended November 27, 2011.
|($ millions)||Three Months Ended|
Nov. 27, 2011
|Three Months Ended|
Nov. 28, 2010
|Fiscal Year Ended|
Nov. 27, 2011
Fiscal Year Ended
The company’s net revenues grew in each geographic region in fiscal year 2011, primarily due to the strength of the Levi’s® brand and its global store network. Fourth-quarter net revenues were up 4 percent on a reported basis compared to the same period in the prior year and full-year net revenues were up 8 percent on a reported basis from the prior year. Fourth quarter net income decreased from the prior year due to the company’s lower gross margin in the fourth quarter of 2011 and a $32 million increase in income taxes, primarily reflecting a $34 million tax benefit recorded in the fourth quarter of 2010.
“In the face of stiff cost and economic headwinds, Levi Strauss & Co. grew the top-line for the second year in a row,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “As we move forward, we need to build on this momentum and on our global scale, strong brands and innovation pipeline, while improving profitability and cash flow to deliver sustainable long-term growth.”
Fourth Quarter 2011 Highlights
- Gross profit in the fourth quarter was $624 million compared with $647 million for the same period in 2010. Gross margin for the fourth quarter was 46 percent of net revenues compared with 50 percent of net revenues in the fourth quarter of 2010. The decline in gross margin resulted from the adverse impact of higher priced-cotton, which was not fully offset by the company’s price increases, and increased sales to the discount channel to manage inventory.
- Selling, general and administrative (SG&A) expenses for the fourth quarter increased to $532 million compared with $528 million in the same period of 2010, primarily reflecting expenses associated with organizational changes and the company’s investment in information technology.
- Operating income for the fourth quarter decreased to $92 million compared with $119 million for the same period of 2010, due primarily to the decline in gross margin.
Regional net revenues for the fourth quarter were as follows:
- Higher net revenues in the Americas primarily resulted from price increases and continued growth in the Levi’s® retail business, which offset a decline in the U.S. Dockers® brand.
- Net revenues grew in Europe from expansion of the company-operated retail network.
- Net revenues in Asia Pacific increased for the Levi’s® and Denizen® brands, including the expansion of the company’s brand-dedicated retail network. The growth in the region was partially offset by lower net revenues in Japan.
“Our fiscal 2011 results reflect the impact of higher cotton prices and the difficult economic environment,” said Blake Jorgensen, chief financial officer of Levi Strauss & Co. “We are focused on operating our business with discipline and improving our cash flow to help us navigate the challenges ahead.”
Fiscal Year 2011 Highlights
- Gross profit for the fiscal year increased to $2,292 million compared with $2,223 million in 2010, as the increase in net revenues and a favorable currency impact offset the decline in gross margin. Gross margin was 48 percent of revenues for the year compared with 50 percent of revenues in 2010.
- SG&A expenses increased to $1,956 million for 2011 compared with $1,842 million in the prior year, primarily reflecting expenses associated with retail store expansion, the company’s investment in global information technology and organizational changes.
- Operating income for 2011 was $336 million compared to $381 million the prior year, due to the lower gross margin and higher SG&A.
Cash Flow and Balance Sheet
The company ended the fourth quarter with cash and cash equivalents of $205 million and unused availability under its credit facility of $495 million. Cash provided by operating activities declined to $2 million for 2011, compared with $146 million for 2010, primarily due to the higher cost of cotton. As a result, the company borrowed against its credit facility to fund working capital, and ended the fiscal year with net debt of $1.8 billion as compared to $1.6 billion at the end of 2010.
Investor Conference Call
The company’s fourth-quarter and full-year 2011 investor conference call will be available through a live audio webcast at http://www.levistrauss.com/investors today, February 7, 2012, at 1 p.m. PST/4 p.m. EST or via the following phone numbers: 800-891-4735 in the United States and Canada, or 973-200-3066 internationally; I.D. No. 45715814. A replay is available on the website the same day and will be archived for one month. A telephone replay also is available through February 14, 2011, at 800-585-8367; I.D. No.45715814.
Forward Looking Statements
This news release contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current assumptions, expectations and projections about future events. We use words like “believe,” “will,” “so we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Investors should consider the information contained in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended 2011, especially in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this news release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this news release. We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this news release to reflect circumstances existing after the date of this news release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.
About Levi Strauss & Co.
Levi Strauss & Co. is one of the world’s largest brand-name apparel companies and a global leader in jeanswear. The company designs and markets jeans, casual wear and related accessories for men, women and children under the Levi’s®, Dockers®, Signature by Levi Strauss & Co.™, and Denizen® brands. Its products are sold in more than 110 countries worldwide through a combination of chain retailers, department stores, online sites, and franchised and company-owned stores. As of November 27, 2011, the company operated 498 stores within 32 countries. Levi Strauss & Co.’s reported fiscal 2011 net revenues were $4.8 billion. For more information, go to http://levistrauss.com.
Levi Strauss & Co.
Levi Strauss & Co.
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