Fourth-Quarter Net Revenues of $1,386 million were down 12 percent
Diluted EPS was $0.14; Adjusted Diluted EPS was $0.20
Cash from operations increased 11 percent to $229 million
Company announces reinstatement of dividends
SAN FRANCISCO (January 27, 2021) – Levi Strauss & Co. (NYSE: LEVI) today announced financial results for the fourth quarter and fiscal year ended November 29, 2020. Due to the company’s fiscal year end, fiscal year 2019 did not have a Black Friday, while the first quarter and the fourth quarter of fiscal 2020 each included the benefit of a Black Friday, and fiscal 2020 also benefited from a 53rd week, which fell in the fourth quarter.
Fourth-Quarter 2020 Highlights
Net revenues of $1,386 million declined 12 percent on a reported and constant-currency basis, a significant sequential improvement from the reported third-quarter net revenues decline of 27 percent. The decrease was primarily due to the impacts of the COVID-19 pandemic, including reduced traffic and ongoing closures of company-operated and third-party retail locations for portions of the quarter in certain markets. The decline was partially offset by the benefit of a 53rd week and Black Friday, which collectively benefited the year-over-year net revenues growth comparison by about three percentage points.
◦ Direct-to-consumer revenue declined just five percent on a reported basis, as company ecommerce revenue increased 38 percent with growth across all regions, partially offsetting a decline in brick-and-mortar store revenues.
◦ The company’s global digital revenues, which includes the company's e-commerce sites as well as the online business of its pure-play and traditional wholesale customers, grew approximately 34 percent on reported basis compared to the same period in the prior year, and comprised approximately 23 percent of fourth-quarter 2020 revenues, up from 15 percent in the fourth quarter of the prior year.
Gross margin increased 100 basis points on reported basis to 55.3 percent, the company's highest fourth-quarter gross margin in its recent history. Adjusted gross margin increased 30 basis points to 54.6 percent, primarily due to price increases, a higher proportion of sales in the higher-margin direct-to consumer channel, lower promotions and healthy inventory.
SG&A decreased nine percent to $653 million; the $67 million decrease primarily reflected the company's cost-savings actions, net of continuing to invest in its omni-channel, A.I. and digitization initiatives.
The company reported net income for the fourth quarter of $57 million and Adjusted net income of $81 million, as compared to $96 million and $108 million, respectively, in the fourth quarter of the prior year. The decline is primarily attributable to the adverse revenue impact of COVID-19. Higher interest expense reflects the company’s additional borrowing earlier in the year to enhance its liquidity position.
Operating margin was seven percent; Adjusted EBIT was $113 million and adjusted EBIT margin was 8.2 percent, up from 7.9 percent in the third quarter, due to the company’s cost- reduction initiatives and higher gross margin, despite the substantial adverse revenue impact of COVID-19.
Adjusted diluted EPS was 20 cents.
Adjusted free cash flow was $172 million, a second consecutive quarter of positive adjusted free cash flow generation, despite the revenue decline, reflecting the company’s focus on financial discipline, cost controls, cash and working capital.
Total inventories, net of reserves, at quarter end decreased eight percent compared to a year prior, reflecting the company's inventory management efforts.
Total available liquidity of $2.3 billion; cash and cash equivalents at quarter end were $1.5 billion.
Author: Levi Strauss & Co