Levi Strauss & Co. (LVIS) has reported 69 percent jump in profit for the quarter ended Aug. 28, 2016. The company has earned $98.32 million in the quarter, compared with $58.18 million for the same period last year.
Revenue during the quarter grew 3.77 percent to $1,185.11 million from $1,142.01 million in the previous year period. Gross margin for the quarter contracted 18 basis points over the previous year period to 50.02 percent. Total expenses were 87.77 percent of quarterly revenues, down from 89.95 percent for the same period last year. This has led to an improvement of 218 basis points in operating margin to 12.23 percent.
Operating income for the quarter was $144.91 million, compared with $114.77 million in the previous year period.
"We are pleased with the third quarter results with broad-based revenue growth across all three regions despite the continued challenging environment, particularly in the U.S.," said Chip Bergh, president and chief executive officer. "Our direct-to-consumer business continues to drive our results with both brick and mortar and ecommerce growing double digits."
Operating cash flow declines
Levi Strauss & Co. has generated cash of $102.82 million from operating activities during the nine month period, down 6.81 percent or $7.51 million, when compared with the last year period.
The company has spent $36.15 million cash to meet investing activities during the nine month period as against cash outgo of $53.59 million in the last year period. It has incurred net capital expenditure of $57.52 million on net basis during the nine month period, up 0.16 percent or $0.09 million from year ago period.
The company has spent $115.66 million cash to carry out financing activities during the nine month period as against cash outgo of $62.86 million in the last year period.
Cash and cash equivalents stood at $271.64 million as on Aug. 28, 2016, down 0.34 percent or $0.92 million from $272.56 million on Aug. 30, 2015.
Working capital increases
Levi Strauss & Co. has recorded an increase in the working capital over the last year. It stood at $837.42 million as at Aug. 28, 2016, up 10.17 percent or $77.29 million from $760.13 million on Aug. 30, 2015. Current ratio was at 2 as on Aug. 28, 2016, up from 1.86 on Aug. 30, 2015.
Cash conversion cycle (CCC) has increased to 114 days for the quarter from 93 days for the last year period. Days sales outstanding were almost stable at 30 days for the quarter, when compared with the last year period.
Days inventory outstanding has increased to 126 days for the quarter compared with 104 days for the previous year period. At the same time, days payable outstanding was almost stable at 42 days for the quarter, when compared with the previous year period.
Debt comes down
Levi Strauss & Co. has recorded a decline in total debt over the last one year. It stood at $1,121.71 million as on Aug. 28, 2016, down 7.24 percent or $87.55 million from $1,209.26 million on Aug. 30, 2015. Total debt was 37.52 percent of total assets as on Aug. 28, 2016, compared with 42.03 percent on Aug. 30, 2015. Debt to equity ratio was at 2.44 as on Aug. 28, 2016, down from 6.07 as on Aug. 30, 2015. Interest coverage ratio improved to 7.56 for the quarter from 6.70 for the same period last year.
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