Levi’s Q4 Net Explodes
LAS VEGAS – Phil Marineau left Levi Strauss & Co. on a distinct “up” note.
The San Francisco-based jeans giant saw its net income more than double in the fourth quarter ended Nov. 26 to $96 million from $44 million in the comparable quarter of 2005. Higher gross margins (48% of sales from 45.6%) and lower taxes, based on a $29 million net reversal on valuation allowances, contributed to the increase. Operating income was $170 million versus $121 million in the prior-year quarter.
At the end of the quarter and year, John Anderson, previously chief operating officer, succeeded Marineau as chief executive officer of Levi’s. Marineau’s tumultuous seven-year tenure as Levi’s CEO was marked by slides in revenue and market share as well as Levi’s entry into the discount channel with the introduction of Levi’s Signature at Wal-Mart and Target.
Revenues also grew, albeit far more modestly, in the fourth quarter, hitting $1.24 billion from $1.19 billion.
“Our fourth-quarter performance was encouraging, with net revenue growth in each of our three regions,” said Anderson. “For the full year, we delivered stable revenues and strong profits and paid down debt. The year ended with improved performance in virtually all of our business units. I am pleased with our positive momentum heading into 2007.”
Profits for the year rose by more than half, but revenues for the year were down very slightly. Net income rose 53.3% to $239 million from $155.9 million. Reductions in selling, general and administrative expenses and restructuring charges more than offset a slight decline in gross profit.
Net revenues were off 0.8% to $4.19 billion from $4.22 billion in 2005. In 2004, revenues were $4.15 billion.
In Marineau’s first year as CEO, ended in November of 2000, net income rose to $218 million from $5.4 million, while revenues slid 9.6% to $4.6 billion from $5.1 billion.
