Levi' S'S Parent Company Listed Its First Quarterly Net Profit Of $147 Million.

Levi Strauss&Co., the American denim group with Levi's, appears to be in the new spring again.

Levi Strauss released its first quarter earnings for February 24, 2019 as of February 24, 2019, during which group sales grew by 7% to $1 billion 435 million, and profits before interest and tax depreciation increased by 14% to $206 million. Net profit was $147 million, a net loss of 19 million US dollars in the same period last year, mainly affected by changes in the tax law.

By Region:

Sales in the US region increased by 9% to US $717 million over the same period last year, while operating profit rose 11% to 124 million US dollars, mainly due to the growth of sales volume in wholesale and direct sales channels in the region, as well as lower advertising costs.

Sales in Europe rose 3% to $465 million compared to the same period last year, and operating profit rose 6% to 122 million US dollars, mainly due to the higher gross margin of direct sales channels, partly boycotting the distribution costs.

Sales in Asia, including China, grew by 8% to $253 million, and operating profit increased by 6% to $43 million over the same period, mainly due to the growth in sales volume of wholesale, franchisees and direct sales channels.

As of the end of the reporting period, Levi Strauss group added 70 stores, and wholesale business revenue increased by 5%.

Chip Bergh, group chief executive, said revenue growth in all regions and sales channels proved that the group's strategic investment was being successful.

In addition to the core brand Levi's, Levi Strauss group also includes leisure brand Dockers, wholesale channel based low-end brand Signature by Levi Strauss Co. and Denizen, which successfully landed on the New York stock exchange in March 22nd this year, and the stock price surged more than 33% on that day.

In fact, Levi's, known as the "originator" of jeans, was listed in 1971, but since the brand launched an attempt to meet the needs of all people and launched the non cowboy business, the profitability of the group continued to decline. Finally, it was privatized by the Haas family of the Strauss family in 1984 with a leverage acquisition of 1 billion 700 million US dollars.

In 2011, the accession of Chip Bergh brought a new turn for Levi's.

When he was in danger, he took the trouble to reiterate the principle of "slow fashion" held by Levi's. He believed that the most important thing is quality, authenticity and originality.

Driven by the launch of joint partnership with other brands or designers, Levi's, which is constantly improving in fashion and quality, is again popular among young consumers.

It is learnt that the Levi's x Air Jordan 4 series shoes have just been launched and become the finalists for the top ten sneakers in 2018.

Levi's ranked 111st in the list of the top 500 global brands in 2018.

According to the 2018 annual "American consumer favorite brand" list released by Morning Consult in May, Levi's is the only fashion brand selected, and consumers have a 71.9 degree of interest.

In order to celebrate the birth of the most classic 501 Jeans, 150th anniversary announced that Levi's recently announced the launch of a series of special products for the first pair of jeans by Hailey Bieber.

Up to now, Hailey Bieber has more than 19 million fans on Instagram.

In February 27th last year, the Levi's brand formally launched the F.L.X. project, which aims to shorten the production cycle of the jeans garment by upgrading the manual garment and automating the cowboy garment process, so as to maximize the supply chain's quick response and sustainable development.

Although some investors and analysts are skeptical about the Levi's's future development prospects, they believe that the layout of the group is still lagging behind its competitors. But Chip Bergh remains optimistic that the annual revenue of the group will reach 7 billion 100 million dollars. The long-term goal is to bring Levi's into the 10 billion dollar club. "Levi's will lead the trend rather than follow the trend."

According to the latest just-style report, sales of the global jeans retail market last year was about $57 billion 300 million, and by 2023, it is expected to achieve $60 billion 90 million, mainly due to the strong growth of consumer demand in developing countries.

The report also predicts that the United States will continue to be the world's largest market for jeans, while China will be the second largest.

Mordor Intelligence data from research institutions show that the jeans market is expected to grow at a rate of 6.7% from 2018 to 2023.

It is worth noting that Levi Strauss is not the only way to develop business with the help of this growth trend. Competition in jeans is becoming increasingly fierce.

According to Reuters, Vans parent VF group has officially split Wrangler and Lee denim business to set up Kontoor Brands Inc., and submitted IPO application on the New York stock exchange.

After the demolition is completed, sales of Kontoor Brands will exceed US $2 billion 700 million.

Another American clothing brand Guess also began targeting the cowboy business. The new CEO Carlos Alberni said at the earnings analysis conference that the future brand will focus on cowboy business as soon as possible to return to the leading position in the market as soon as possible. Its first task after taking office is to optimize the product development and sales channels.

Ochirly parent Heji international bought the palace denim brand Denham at the beginning of this year to further penetrate the jeans market.

JACK&JONES Jack&Jones announced last year that it will return to the cowboy market and focus on full channel operation.

To this end, the brand has introduced a new and more modern Logo, consisting of two letters J, denim blue.

But Chip Bergh has bigger ambitions.

He thinks that compared with Kontoor group and PVH with Calvin Klein, Levi's's competitor is Nike.

Despite the analysis, Levi's sales amounted to about $5 billion 700 million, while Nike sales were close to US $39 billion. There is still a big gap between them. However, from the perspective of price earnings ratio, Levi's is 29.1, Nike is 32.8, VF group is 20.6, PVH group is 13.1, Levi's is obviously closer to Nike.

Chip Bergh also mentioned in the earnings report that the biggest advantage of the group is the Levi's brand.

Just as Nike has successfully developed a diversified business from the original single shoe business, but basically, almost all the income of Nike group still comes from the Nike brand itself.

In addition, China is also seen as a key battleground for further upgrading of Levi's performance.

Chip Bergh stressed that China accounts for only 3% of Levi's business, and Nike and Adidas brands are close to 20% in China. The group has great potential in China.

Last week, Levi's officially launched the official small program "my LEVIS official customization" at WeChat, which mainly sells custom-made goods such as sweaters, jackets and T-shirts, so as to touch more young Chinese consumers.

Expanding the brand matrix is also an urgent problem for Levi Strauss.

According to public information, Levi Strauss raised a total of $161 million through the IPO. These funds will be used for general purposes of business operations and will be used for acquisitions if appropriate opportunities are available.

Another analysis pointed out that the US macroeconomic slowdown has a greater impact on Levi Strauss.

According to the latest report by Coresight Research, a market research firm, 2187 retail outlets have been closed since the beginning of the year, an increase of 23% over the same period last year.

In the current pformation of major retail enterprises, the future of Levi Strauss is still a question mark.

As of yesterday's close, Levi Strauss shares rose 2.72% to 21.88 dollars, with a market capitalization of about 8 billion 435 million dollars.

Author: Yohanna