In the fourth quarter of fiscal 2018, net revenue of Levi Strauss & Co went up 9 per cent on a reported basis and 11 per cent on a constant currency basis, which excludes $32 million in unfavourable currency translation effect. Full year net revenue of the company grew 14 per cent on a reported basis and 13 per cent on a constant currency basis.
Net revenues related to the company’s direct-to-consumer business grew 13 per cent for the fourth quarter and 18 per cent for the full year, due primarily to performance and expansion of the company’s retail network, as well as growth in its e-commerce business. The company had 74 more company-operated stores at the end of fiscal 2018 than it did at the end of fiscal 2017. Net revenues related to the company’s wholesale business grew 7 per cent for the fourth quarter and 11 per cent for the full year, primarily reflecting higher revenues from the Americas and Europe.
In the Americas, net revenues grew 8 per cent on a reported basis and 9 per cent on a constant currency basis, reflecting higher revenues across both wholesale and direct-to-consumer channels across the region. Operating income for the region was flat as higher net revenues were partially offset by higher selling expenses and advertising investments.
In Europe, net revenues grew 13 per cent on a reported basis and, excluding unfavourable currency translation effects of $14 million, 17 per cent on a constant currency basis, reflecting broad-based growth across all markets and channels, including strong growth in the company’s women’s and tops business. Operating income growth of 26 per cent reflects improved operating leverage driven by higher net revenues.
In Asia, net revenues grew 5 per cent on a reported basis and, excluding unfavourable currency translation effects of $11 million, 10 per cent on a constant currency basis, reflecting expansion and performance of the company’s direct-to-consumer business. Operating income decreased by 32 per cent, reflecting an increase in selling expenses related to retail expansion, which more than offset the impact of higher revenues.
On a reported basis, gross margin for the fourth quarter was 53.2 per cent compared with 53.4 per cent in the same quarter of fiscal 2017, primarily due to the margin benefit from revenues growth in the company’s global direct-to-consumer channel being more than offset by growth in lower margin businesses, foreign currency translation effects and inventory clearance.
“We had an outstanding year with reported net revenues of $5.6 billion, growing 14 per cent year-over-year on a reported basis,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “It’s clear our strategies to diversify our product portfolio, expand our direct-to-consumer business, and deepen our connection with consumers worldwide have worked, resulting in both higher annual revenues and gross margins.”