SAN FRANCISCO (Reuters) - Jeans maker Levi Strauss & Co said on Tuesday that quarterly net profit rose 17 percent on higher revenue from currency gains and improved consumer spending.
The privately held company has been opening more retail stores around the globe to counteract weakness in its wholesale channel, where big department stores like Macy's M.N and discounters such as Target Corp TGT.N had cut back on orders.
“You’re clearly seeing the strength in the wholesale channel start to come back,” said Chief Financial Officer Blake Jorgensen during a conference call.
After improving its product styles in recent years, the company has been working with its large department store customers to improve displays. Executives also cited signs of improved sales in its Dockers division, which emphasizes khaki clothing, and strength in its Levi’s brand.
Net profit in Levi Strauss’s first quarter grew to $56 million, from $48 million in the year-ago quarter.
Revenue rose 9 percent in the quarter to $1.04 billion, the company said. Excluding gains from currency, revenue rose 4 percent.
In the Americas region, which includes the United States, revenue rose 8 percent. Revenue rose 2 percent in the Asia Pacific region and 15 percent in Europe.
The San Francisco-based company said its 2009 repurchase of outlet stores also helped fuel growth.
A global spending slump has hurt the company’s profit in recent quarters, especially in Europe, but the stores Levi Strauss operate globally have helped offset the weakness.
Gross margin in the quarter rose to 51.5 percent of revenue from 46.8 percent a year earlier, due to fewer markdowns and more company-owned retail stores, which carry higher margins.
Jorgensen said gross margins would be slightly higher in the first half of the year compared to the second half.
Retailers are still focused on keeping inventories tight, after having already pared back merchandise in the wake of the U.S. recession, he said.
Levi Strauss reports quarterly results because of its publicly-held debt, which stood at $1.51 billion at the end of the quarter, down from $1.58 billion in the year-ago period.
Reporting by Alexandria Sage; Editing by Steve Orlofsky, Bernard Orr
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