Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| Adjusted gross margin of 55.6% came in better than our expectations driven by the favourable mix-shift to DTC |
| It's one of the most iconic brands in the world, awesome opportunities for growth ahead and an amazing team |
| Overall, we had a solid quarter despite the challenging environment |
| Our disciplined execution, combined with the margin upside, enabled us to deliver EPS consistent with our expectations |
| We continue to grow share with the higher income consumer and see strength in our full price mainline business, with strong sales momentum of our Tier 1 and Tier 2 products |
| In addition, the Levi's brand continues to gain US market share, up in men's, women's and our core 18 to 30 year old age group |
| Finally, we continue to see strength in our brand equity metrics, growing our brand consideration and unaided awareness in denim across key markets |
| Our other brand segment also shows strength |
| This successful program is helping us forge deeper consumer connections while developing valuable insights from our most loyal fans |
| Near-term opportunities include improving our supply chain execution, ensuring the continued success of our pricing optimization plan and delivering more newness and innovation |
| The work we are doing today and in the years ahead will help us further drive sustainable, profitable, long-term growth |
| Beyond Yoga had a very strong quarter, up 25% versus prior year |
| Despite the impairment charge we took on Beyond Yoga, which Harmit will explain in more detail, we remain very bullish about this brand long-term |
| We are already seeing the benefit today in our results as e-commerce comps are accelerating |
| First, we are achieving strong progress in our areas of strategic focus |
| The DTC business grew 13% in Q3 versus prior year and comped positively in every region and across mainline, outlet, and e-commerce |
| I also see tremendous upside in our e-commerce business |
| Our e-commerce results have accelerated with 18% growth this quarter on top of the 16% growth in the prior year quarter |
| In the US, our DTC business grew 10%, and US mainline which sells our most premium product, comped double-digit versus year ago |
| So, yes, like I said, I'm super excited about the opportunities we have, I'd say both, well, all of the opportunities we have, whether that's growing our international business, it's DTC, and then, of course, category expansion and we're building capability across all fronts, candidly |
| So I think those are the factors that we think really help lift gross margins year-over-year in quarter four |
| Unlocking further productivity in our stores is a critical enabler to driving overall profitable growth and to accelerate further new-store expansion opportunities globally |
| Early indications from the pricing actions we took in US wholesale late in Q3 are positive |
| Exiting the quarter, we also began to see the impact of our lower inventories and improved fill rates |
| We expect sequential improvement in US wholesale trends behind the impact of the surgical pricing actions in August and customer fill rates normalizing in Q4 |
| To your question about gross margins, which we are getting better for the business, we beat gross margin expectations in quarter three largely driven by the continued strength in our direct-to-consumer business |
| So, on inventory, we ended the quarter better than where we thought we'd be |
| Our international business continued to outpace the total Company, growing plus 5%, excluding Russia |
| Asia was again the standout, with strong double-digit growth in our three largest Asian markets, India, China, and Japan |
| And as I said, we're making sequential improvements there and I think it's going to help |
| Statement |
|---|
| Again, the consumer being pressured, the combination of that with the hot weather did have a negative impact on the category |
| Global wholesale was the drag on our business in Q3, down 10% this quarter compared to up 6% in the prior year |
| Adjusted free cash flow was a negative $21 million in the quarter, down from $12 million in the third quarter last year |
| In the Americas, net revenues declined 7% on top of 3% growth a year ago |
| The second is some value concerns that our customers were talking to us about some of our fits, which we've addressed |
| The headwinds were largely the pricing actions that we have initiated and lower full price sales relative to a year ago |
| However, given the ongoing uncertainty in the macro-environment, we are taking a cautious approach to our outlook for the fourth quarter |
| The category was soft |
| Reported revenues were flat to prior year and down 2% on a constant-currency basis, as the strong double-digit growth of our direct-to-consumer business was offset by continued softness in the wholesale channel, particularly in the US |
| I know that that was a big concern that many had |
| And then third, we have faced over the course of the year some congestions in our DCs, which are largely behind us |
| And you all have known me for a long time, I barely talk about the weather report when I'm talking about our business results, but I think there is no doubt that our wholesale business was somewhat impacted by the really, really hot summer, because the wholesale assortment is pretty much denim bottoms |
| It was down mid-single-digits, apparel was down mid-single-digits |
| It's been tough, largely because we had more inventory |
| By segment, we continue to expect a low single-digit decline in the Americas despite continued strength in US DTC and in Latin America |
| Overall, the contraction was driven by lower full price sales, higher product costs, and strategic pricing actions to drive volume and capture market share, partially offset by favourable channel and geographic mix, lower airfreight and FX |
| Lower airfreight and lower promotions relative to a year ago |
| The impairment was due to strategically investing in the brand and team and slowing previously anticipated expansion in response to the current macroeconomic conditions, as well as an increase in discount rate |
| Versus prior year, gross margin contracted 130 basis points, yet was 260 basis points above Q3 '19 |
| It's not the year that any of us anticipated, there are clearly headwinds, but we have our arms around the issues |
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