An employee holds a shopping bag while calling a customer at Levi Strauss & Co.’s flagship store. in San Francisco, March 18, 2019
David Paul Morris Bloomberg | Getty images
Levi Strauss & Co. on Thursday reported double-digit sales declines for its first fiscal quarter as continued store closures in Europe and light U.S. traffic due to the Covid pandemic weighed on results.
But the denim maker has boosted its sales and profit forecasts for the first half of the year, assuming the global health crisis isn̵
Its shares jumped more than 6% in trading outside working hours.
“These results point to really good evidence that we will emerge from the pandemic as a stronger company,” CEO Chip Berg told CNBC. “We have beaten our own expectations internally [and] beat external expectations, although a third of our stores were closed in Europe throughout the quarter. “
Here’s how the company did for the quarter ended Feb. 28, compared to analysts’ expectations based on a Refinitiv survey:
- Earnings per share: adjusted 34 cents against expected 25 cents
- Revenue: $ 1.31 billion versus $ 1.25 billion expected
Levi’s net income fell slightly to $ 142.5 million, or 35 cents a share, from $ 152.7 million, or 37 cents a share, a year earlier. Excluding one-time fees, the company earns 34 cents a share, better than analysts forecast 25 cents, according to Refinitiv.
Total revenue fell about 13 percent to $ 1.31 billion from $ 1.51 billion a year earlier. That came better than analysts’ estimate of $ 1.25 billion.
The retailer said the double-digit decline in sales during the year was mainly due to reduced traffic in its stores during the pandemic, as well as the continued closure of stores in some markets where Covid’s restrictions remain in place. In Europe, for example, more than 40 percent of Levi’s stores are currently closed and others are part-time, the company said.
Levi’s wholesale revenue fell 4% in the last quarter, marking an improvement over the previous period.
Sales directly to consumers decreased by 26% due to fewer customers visiting Levi’s stores and especially in markets that rely on tourism. The decline was partially offset by a 25% increase in the company’s e-commerce sales during the quarter, Levi’s said. Total online revenue, which includes digital sales from wholesale partners, increased by 41%.
Although business trends are improving, profits and sales are expected to continue to be “significantly adversely affected” at least in the second quarter of 2021, Levy said.
The company raised its revenue and profit prospects in the first half of the year, assuming the pandemic did not worsen.
Sales are now expected to grow 24% to 25%, and adjusted earnings are expected to be in the range of 41 cents to 42 cents, suggesting a profit of 7 cents to 8 cents in the second fiscal quarter. Analysts called for a second-quarter gain of 5 cents a share.
Levi shares have risen nearly 25% in a year. The company has a market capitalization of $ 10 billion.
Find the full press release from Levi’s here.