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Levi Strauss & Co. mentioned Thursday that buyers are stocking up on denims in new sizes and types within the U.S. and China as they emerge from their properties through the pandemic.
The momentum each in shops and on-line boosted its fiscal second-quarter earnings and income forward of analysts’ expectations. Though gross sales have been nonetheless down 3% from 2019, the retailer anticipates fiscal third-quarter gross sales are on monitor to prime pre-pandemic ranges. That was one thing Levi beforehand did not count on to realize till the fourth quarter.
Levi’s inventory jumped round 3% in prolonged buying and selling on the information.
Whereas Levi raised its income and revenue outlook for the remainder of the 12 months, the corporate cautioned it assumes the Covid pandemic does not worsen all over the world.
“There are a whole lot of issues which are outdoors of our management, just like the pandemic … and the Delta variant, and what is going on to occur subsequent,” mentioned Chief Govt Chip Bergh in a cellphone interview. “However the staff has demonstrated a whole lot of agility and with the ability to reply.”
Here is what the corporate reported for the quarter ended Might 30 in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by Refinitiv:
- Earnings per share: 23 cents adjusted vs. 9 cents anticipated
- Income: $1.28 billion vs. $1.21 billion anticipated
Levi mentioned it swung to a revenue of $65 million, or 16 cents per share, from a web lack of $364 million, or 91 cents per share, a 12 months earlier. Excluding one-time changes, Levi earned 23 cents per share, topping analysts’ estimates for 9 cents.
Levi’s income surged 156% to $1.28 billion from $498 million a 12 months earlier. That beat expectations for $1.21 billion.
Gross sales within the U.S. and China surpassed 2019 ranges, however have been nonetheless down on a two-year foundation in Europe because of ongoing retailer closures associated to the well being disaster. Roughly a 3rd of Levi’s European shops, and 17% of its international areas, have been closed through the interval.
The corporate mentioned 92% of its shops are reopened in the meanwhile.
Value will increase, financial savings on sourcing supplies and decrease promotional exercise helped increase earnings. It recorded report excessive revenue margins.
A brand new denim cycle is what’s serving to to drive gross sales momentum. In current months, tight-fitting pants have been trending out of favor, and as a substitute buyers are flocking to looser-hanging, wide-leg and flared denims. Many customers really feel the necessity to completely refresh their wardrobes. Levi can also be seeing development in its tops enterprise.
“We’re seeing good proof of the brand new denim cycle pushed by the looser and baggier suits, which we have led, and that offers us a whole lot of optimism in regards to the second half of this 12 months,” Bergh advised CNBC.
Levi additionally mentioned it has been working to strengthen its wholesale operations by investing in relationships with key companions, corresponding to Nordstrom, and getting out of shops which are synonymous with markdowns. Wholesale income within the newest interval rose 167% from a 12 months earlier.
And the corporate remains to be rising its digital enterprise, with international e-commerce gross sales up 75% 12 months over 12 months, representing about 23% of complete gross sales.
For fiscal 2021, Levi expects earnings of between $1.29 and $1.33 per share after changes. Analysts had been on the lookout for earnings of $1.15 per share.
For the second half of the 12 months, Levi expects gross sales to rise 28% to 29% in contrast with a 12 months earlier, and be up 4% to five% in contrast with 2019.
“Revenues in most markets are recovering quicker than anticipated, and we’re rising from the pandemic with sustainable and improved structural economics,” Chief Monetary Officer Harmit Singh mentioned in a information launch.
Levi raised its dividend by 2 cents per share to eight cents for the third quarter.
Levi’s inventory has rallied almost 40% 12 months so far. The corporate’s market cap is roughly $11.2 billion.
Discover the complete earnings press launch from Levi’s right here.
This story is growing. Please test again for updates.
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