Levi=?UTF-8?B?4oCZ?=s pays the cotton toll and gains 50% less
Levi Strauss & Co.'s fourth-quarter net income fell by nearly 50% as
the clothing company coped with lower margins and higher taxes, namely
rising cotton prices. Its selling, general and administrative expenses
rose by $4 million.
"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."
Levi's earned $138 million for the full year versus $157 million in
fiscal 2010. Its full-year revenue rose 8 percent to $4.76 billion
from $4.41 billion. 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.
"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,"
company said in a statement released Tuesday.
The privately held company said Tuesday that its revenue improved but
it earned $44 million for the period that ended Nov. 27, compared to
the $86 million it gained a year earlier. Its selling, general and
administrative expenses rose by $4 million, while Levi's had also to
face a $32 million increase in income taxes, compared with the prior
year's fourth quarter, when it recorded a one-time tax benefit of $34
million.
Revenue rose from $1.29 billion to $1.34 billion for the period as
Levi's brand grew in popularity around the globe.
The company's net revenues grew in each geographic region in fiscal
year 2011, primarily due to the strength of the Levi's(R) 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.
Higher net revenues in the Americas primarily resulted from price
increases and continued growth in the Levi's(R) retail business, which
offset a decline in the U.S. Dockers(R) brand. In a similar path, net
revenues grew in Europe from expansion of the company-operated retail
network.
Meanwhile, net revenues in Asia Pacific increased for the Levi's(R)
and Denizen(R) 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.
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.
Originally posted here:
Levi's pays the cotton toll and gains 50% less
http://www.textileglobal.com/2012/02/levi%e2%80%99s-pays-the-cotton-toll-and-gains-50-less.html
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