An worker holds a procuring 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 greater worth factors, typically on to clients.
Levi additionally reaffirmed its forecast for fiscal 2022, assuming no important worsening of inflationary pressures or closures of world economies. It took under consideration any hit from its current choice to quickly droop enterprise in Russia, which represents roughly 2% of its complete gross sales.
The retailer has but to see shoppers commerce down for inexpensive attire, at the same time as every thing from gasoline costs to grocery payments surge, Levi CEO Chip Bergh instructed CNBC in a cellphone interview. And nonetheless, as the corporate has raised costs on some gadgets to offset different bills throughout the enterprise, client demand has remained robust, he added.
To make sure, Bergh stated Levi is retaining a detailed eye on client demand, figuring out 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.”
This is how Levi did for the three-month interval ended Feb. 27 in contrast with what Wall Avenue was anticipating, primarily based 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 internet revenue of $196 million, or 48 cents per share, in contrast with internet revenue of $143 million, or 35 cents a share, a 12 months 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 12 months 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 throughout 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 corresponding to Goal and malls 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, however it permits Levi to construct stronger relationships with customers and gather extra insights on their shopping habits. Direct-to-consumer represented 39% of complete gross sales within the quarter, up from 38% within the earlier interval and 36% a 12 months 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% 12 months over 12 months. 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 instructed CNBC, saying “the world continues to develop into much more informal.”
Singh added: “We have seen demand in March keep the momentum, and that provides us confidence about the remainder of the 12 months.”
Discover the complete earnings press launch from Levi here.
This story is growing. Please verify again for updates.