A sign hangs in front of Levi Strauss & Co’s headquarters. on April 9, 2021 in San Francisco, California.
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Levi Strauss & Co. Wednesday maintained its outlook for the full year and strengthened its financial goals for the next five years as the denim retailer grows its e-commerce business.
The company claims to be much stronger than before Covid pandemic and since public market launch in March 2019.
“We are reaffirming our full-year guidance, despite all the difficulties,” Chief Financial Officer Harmit Singh said in an interview ahead of Levi’s annual investor day event. “The trends we are seeing in the business give us confidence,” says Singh. “We’re looking at the short-term, while also not losing sight of the long-term.”
In recent weeks, retailers from Walmart arrive Abercrombie & Fitch alluded to the challenges they are facing, from ongoing problems in supply chains and nonconforming inventories, to red-hot inflation and the potential for a drop in consumer spending.
Retail executives have said that lower-income shoppers have felt the pinch of higher commodity prices and adjusted their budgets accordingly, while Wealthy households are shopping for new outfits, makeup and luggage for summer travel. Differences in behavior have led to a similar divide in the retail industry. So far in this earnings season, premium and luxury brands – from Canadian Goose to Michael Kors’s parents Capri Holdings – most perform better than businesses that serve price-conscious consumers.
Levi doesn’t expect the volatile economic environment to dampen demand for its jeans.
Currently, the company sees annual revenue growth in the 6% to 8% range, up from its previous target of 4% to 6%, through 2027. If achieved, that will bringing Levi’s revenue to nearly $10 billion five years from now.
For fiscal year 2022, it still forecast sales to grow 11% to 13% from 2021 levels, with adjusted earnings per share falling in the range of $1.50 to $1.56. According to Refinitiv data, analysts are looking for a revenue increase of 11.8%, with Levi earning adjusted earnings per share of $1.55.
By 2027, Levi said it aims to expand its direct-to-consumer business to 55% of total revenue and triple e-commerce revenue.
Levi’s direct business accounted for approximately 36% of total revenue for the retailer’s most recent financial year ended November 28. Digital revenue, including from wholesale partners, accounted for 22% of total sales of $5.8 billion that year, according to annual filings.
“As we continue to scale [e-commerce]That business will become a lot more profitable, CEO Chip Bergh said in an interview.
In addition to growing online, Levi is also driving shoppers into more than just the company’s iconic denim jeans. It aims to nearly double sales from shirts by 2027. Levi is also projecting its women’s business, which accounts for about a third of current sales, to doubled at that time.
According to Singh, Levi’s women’s business has a higher gross margin than the company’s average gross margin.
Levi predicts its Dockers and Beyond Yoga banners will contribute to total sales of nearly $1 billion by 2027. Levi acquires Beyond Yoga, best known for its women’s leggings and stretch tops, for an undisclosed amount last year.
Shares of Levi are down about 28% this year.
This story is evolving. Please check back for updates.
