Levi Strauss expects upbeat earnings amidst revival of apparel demand

Levi Strauss expects upbeat earnings amidst revival of apparel demand

by Pranali Mehta

American clothing and denim company, Levi Strauss & Co. has reportedly forecast a strong full-year profit after its quarterly earnings crushed estimates, as demand for its tops, jeans, and jackets sprang back far earlier than expected.

The company raised its third-quarter dividend by 33%, while share prices rose by 3% in extended trading, claimed sources with knowledge of the matter.

Levi has also been profiting from its partnerships with multiple brands, including Valentino, and its direct-to-consumer sales strategy that increased adjusted gross margins by 670 basis points to 58.2% in the second quarter.

If reports are to be believed, customers have been refreshing their wardrobes after the ease out of COVID-19-related restrictions and months-long lockdowns, leading to the accelerated sale of street clothes and loose-fitting jeans at Levi and its rivals Abercrombie & Fitch and American Eagle.

Chief Executive Officer at Levi Strauss, Charles Bergh was quoted saying that nearly 35% of customers in the U.S. have seen a change in their waist sizes, which is creating another reason for people to go out and purchase new apparel.

The clothing company has revealed that it opted for price increases, lower promotions, and sourcing savings to support profit margins in the recent past.

As a result, net revenues saw a two-fold increase to USD 1.28 billion during the second quarter ended May 30, beating analyst estimates of USD 1.21 billion. Earnings per share excluding items stood at 23 cents, versus market estimates of just 9 cents.

Meanwhile, digital channel revenues rose 75% as people showed an increased inclination towards getting their orders home-delivered.

Levi stated that it would focus on improving its digital business by investing in distribution centers and developing a program that allows users to pick up online orders at physical stores.

It is worth noting that the company is expecting profit-per-share for 2021 to be between USD 1.29-1.33, slightly above analyst estimates of USD 1.15. It has also projected second-half revenue to be higher than the pre-pandemic levels in 2019.

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Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...