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Levi Strauss & Co. (LEVI) reviews Q1 2022 earnings beat

An worker holds a buying bag whereas ringing up a buyer on the Levi Strauss & Co. flagship retailer in San Francisco, March 18, 2019.

David Paul Morris | Bloomberg | Getty Photos

Denim retailer Levi Strauss & Co. on Tuesday reported fiscal first-quarter earnings and income that topped analysts’ estimates because it offered extra of its denims and T-shirts at increased worth factors, typically on to clients.

Levi additionally reaffirmed its forecast for fiscal 2022, assuming no vital worsening of inflationary pressures or closures of worldwide economies. It took into consideration any hit from its current choice to briefly suspend business in Russia, which represents roughly 2% of its whole gross sales.

The retailer has but to see customers commerce down for cheaper attire, at the same time as every part from gasoline costs to grocery payments surge, Levi CEO Chip Bergh advised CNBC in a cellphone interview. And nonetheless, as the corporate has raised costs on some gadgets to offset different bills inside the enterprise, client demand has remained robust, he added.

To make sure, Bergh stated Levi is maintaining an in depth eye on client demand, realizing that projections of a looming recession have been rising amongst economists. “We do not have our head within the sand,” the CEO stated. “If we see [demand] beginning to get wobbly, we are going to take the suitable motion.”

Levi shares rose round 1.5% in prolonged buying and selling, after closing the day down 1.5%.

Here is how Levi did for the three-month interval ended Feb. 27 in contrast with what Wall Road was anticipating, based mostly on a survey of analysts by Refinitiv:

  • Earnings per share: 46 cents adjusted vs. 42 cents anticipated
  • Income: $1.59 billion vs. $1.55 billion anticipated

Levi reported web revenue of $196 million, or 48 cents per share, in contrast with web revenue of $143 million, or 35 cents a share, a yr earlier. Excluding one-time gadgets, it earned 46 cents a share, higher than the 42 cents that analysts had been on the lookout for.

Income rose 22% to $1.59 billion from $1.31 billion a yr earlier. That topped expectations for $1.55 billion.

Levi stated it took a roughly $60 million hit to gross sales attributable to provide chain constraints in the course of the newest interval. Its international direct-to-consumer gross sales rose 35% from the prior-year interval, and wholesale income was up 15%.

Whereas Levi nonetheless companions with big-box retailers comparable to Target and department shops like Macy’s to promote its denims, the corporate has more and more pushed clients towards its personal brick-and-mortar shops and web site. Not solely can these transactions be extra worthwhile, nevertheless it permits Levi to construct stronger relationships with customers and gather extra insights on their looking habits. Direct-to-consumer represented 39% of whole gross sales within the quarter, up from 38% within the earlier interval and 36% a yr in the past, the corporate stated.

Damaged down by area, gross sales climbed 26% within the Americas, rose 13% in Europe, and grew 11% in Asia on a year-over-year foundation.

Levi reaffirmed its outlook for fiscal 2022, which requires income to develop between 11% and 13% yr over yr. Analysts have projected a rise of 11.8%.

The retailer nonetheless sees its annual per-share earnings ranging between $1.50 and $1.56, in contrast with analysts’ outlook of $1.54.

“The denim class is rising in a low-double-digit [rate] relative to the place it was earlier than pandemic,” Chief Monetary Officer Harmit Singh advised CNBC, saying “the world continues to change into much more informal.”

Singh added: “We have seen demand in March preserve the momentum, and that offers us confidence about the remainder of the yr.”

Discover the total earnings press launch from Levi here.

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