Levi Strauss has reported a drop in net revenue by four per cent in the second quarter, primarily reflecting a decline in sales in Asia and Europe.
The decline was attributed to challenging global economy, continued impact of higher-priced cotton and the negative effects of currency.
Second quarter net income was US$13 million compared with US$21 million in the second quarter of 2011 while operating income of US$46 million declined from US$65 million the prior year.
“While our business grew in the Americas, primarily driven by our own retail stores, Europe continues to be a challenge, and for the first time in two years our business in Asia declined,” said Chip Bergh, president and CEO.
Net revenues in Europe decreased primarily due to a lower volume of sales to the traditional wholesale channels and to franchisee stores, reflecting the ongoing depressed retail environment, most notably in southern Europe.
In Asia, the company’s net revenues also decreased as key markets, such as India and China, faced increased economic challenges. Both Levi’s and Denizen brand revenues declined.
Bergh said the company will rationalise business, reduce operating costs and focus resources on the opportunities that will have the most impact in growing shareholder value to cope with the tougher economic conditions.