Blue Levi’s 501 jeans on display. Getty Images/Sean Gallup In the United States and China, buyers are loading up on jeans in new sizes and styles when they emerge from their houses during the pandemic, according to Levi Strauss & Co. The company’s fiscal second-quarter earnings and revenue surpassed analysts’ estimates, thanks to strong sales in stores and online. Despite the fact that sales were down 3% from the previous year, the retailer expects fiscal third-quarter revenues to exceed pre-pandemic levels. That was something Levi didn’t think he’d be able to do until the fourth quarter. On the news, Levi’s shares surged around 3% in extended trade. While Levi increased its revenue and profit forecasts for the rest of the year, the firm noted that it is assuming the global Covid epidemic does not intensify. In a phone interview, Chief Executive Chip Bergh said, “There are a lot of variables that are outside of our control, like the pandemic… and the Delta variation, and what’s going to happen next.” “However, the squad has shown a lot of agility and responsiveness.” Based on a Refinitiv survey of analysts, here’s how the firm reported for the quarter ending May 30 compared to what Wall Street expected: Earnings per share (adjusted): 23 cents vs. 9 cents projected $1.28 billion in revenue vs. $1.21 billion projected Levi reported a $65 million profit, or 16 cents per share, compared to a net loss of $364 million, or 91 cents per share, a year before. Levi earned 23 cents per share after one-time adjustments, beating analysts’ expectations of 9 cents. From $498 million a year ago, Levi’s revenue increased by 156 percent to $1.28 billion. This was higher than the $1.21 billion forecast. Sales in the United States and China surpassed those of the previous year, while sales in Europe were still down on a two-year basis due to continuous store closures related to the health problem. During this time, over a third of Levi’s European stores and 17% of its global sites were closed. Currently, 92 percent of the firm’s outlets have reopened, according to the corporation. Profits were boosted by price hikes, material cost savings, and reduced promotional activities. Profit margins were at an all-time high. A new denim cycle is assisting in the growth of sales. Tight-fitting pants have fallen out of favor in recent months, with shoppers opting to looser-hanging, wide-leg, and flared jeans instead. Many customers feel compelled to completely revamp their wardrobes. Levi’s shirts business is also gaining traction. “We’re seeing solid evidence of the new denim cycle, which we’ve led, driven by looser and baggier fits, and that gives us a lot of optimism for the second half of this year,” Bergh told CNBC. Levi also stated that it has been working to boost its wholesale operations by investing in relationships with key partners such as Nordstrom and exiting markdown-prone outlets. In the most recent quarter, wholesale income increased by 167 percent over the same period last year. And the company’s digital sector is still rising, with global e-commerce sales jumping 75% year over year, accounting for nearly 23% of overall sales. After adjustments, Levi forecasts earnings of $1.29 to $1.33 per share in fiscal 2021. Earnings of $1.15 per share were expected by analysts. Levi expects sales to increase by 28 percent to 29 percent in the second half of the year compared to the same period last year, and by 4 percent to 5 percent compared to 2019. In a news release, Chief Financial Officer Harmit Singh noted, “Revenues in most areas are rebounding quicker than expected, and we are emerging from the epidemic with sustainable and better structural economics.” For the third quarter, Levi upped its dividend by 2 cents per share to 8 cents. Since the beginning of the year, Levi’s stock has risen over 40%. The company’s market capitalization is estimated to be over $11.2 billion. The complete earnings news release from Levi’s may be seen here. This story is still unfolding. Please return to this page for updates./n
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