An employee holds a shopping bag while calling a customer at the Levi Strauss & Co flagship store. in San Francisco, March 18, 2019.
David Paul Morris | Bloomberg | beautiful pictures
Denim retailer Levi Strauss & Co. on Tuesday reported fiscal first-quarter earnings and revenue topping analysts’ estimates as it sold more jeans and t-shirts at a higher price, often directly to customers.
Levi also reaffirmed his forecast for fiscal year 2022, assuming no significant deterioration of inflationary pressures or a shutdown of global economies. It has taken into account any hits since its recent decision to make it temporary suspend business in Russiaaccounts for about 2% of its total sales.
Levi’s CEO, Chip Bergh, told CNBC in a phone interview. In addition, as the company raised prices of some items to cover other costs of its business, consumer demand remained strong, he added.
To be sure, Bergh said Levi is keeping a close eye on consumer demand, knowing that economists predict a growing recession. The CEO said: “We have no head in the sand. “If we see [demand] begins to wobble, we will take appropriate action. ”
Shares of Levi’s were up about 1.5% in extended trading, after ending the day down 1.5%.
Here’s how Levi did in the three-month period ending February 27th compared to what Wall Street had predicted, based on a survey of Refinitiv analysts:
- Earnings per share: Adjusted 46 cents from 42 cents expected
- Revenue: $1.59 billion vs. $1.55 billion expected
Levi reported net income of $196 million, or 48 cents per share, compared with net income of $143 million, or 35 cents a share, a year earlier. Excluding one-time items, it earned 46 cents per share, better than the 42 cents analysts were looking for.
Revenue rose 22% to $1.59 billion from $1.31 billion a year earlier. That topped expectations with $1.55 billion.
Levi said sales have hit around $60 million due to supply chain constraints in the most recent period. Its global direct-to-consumer sales grew 35% year-over-year, and wholesale sales grew 15%.
While Levi still works with big box retailers like Target and department stores like Macy’s To sell its jeans, the company has increasingly pushed customers to its own brick-and-mortar stores and websites. Not only can those deals be more profitable, but they also allow Levi to build stronger relationships with shoppers and glean more insights into their browsing habits. The company said direct-to-consumer accounted for 39% of total sales in the quarter, up from 38% in the previous period and 36% a year ago.
Broken down by region, sales grew 26% in the Americas, 13% in Europe and 11% in Asia year over year.
Levi reaffirmed its outlook for fiscal 2022, calling for revenue to grow between 11% and 13% year-over-year. Analysts had expected an 11.8% gain.
The retailer still sees its annual earnings per share range between $1.50 and $1.56, compared with analysts’ forecasts of $1.54.
“The denim category is growing at a double-digit low [rate] compared to where it was before the pandemic,” Chief Financial Officer Harmit Singh told CNBC, saying “the world continues to become a lot more normal.” “
Singh added: “We saw demand in March maintain momentum and that gives us confidence about the rest of the year.”
Find the full press release on earnings from Levi this.
