An employee has a shopping bag while calling a customer at the Levi Strauss & Co. flagship store. of San Francisco, March 18, 2019.
David Paul Morris | Bloomberg | Getty Images
Levi Strauss & Co. reported a double-digit drop in sales during its first fiscal quarter on Thursday, as store closures in Europe and pedestrian traffic in the U.S. due to the Covid pandemic weighed on results.
But the denim maker boosted its sales and profit forecasts during the first half of the year, assuming the global health crisis doesn’t get worse from there. Chief Financial Officer Harmit Singh said in an interview with CNBC that the company expects sales to return to 2019, pre-pandemic levels for the fourth quarter.
Its shares jumped more than 6% in overtime trading.
“These results point to really good evidence that a stronger company will emerge from the pandemic,” said Chip Bergh, CEO at CNBC. “We exceeded our own expectations internally [and] exceeding external expectations, despite having a third of our stores closed in Europe throughout the quarter “.
The following explains how the company did during the quarter ended Feb. 28, compared to what analysts predicted, according to a Refinitiv survey:
- Earnings per share: 34 cents adjusted against 25 cents expected
- Revenue: $ 1.31 billion versus projected $ 1.25 billion
Levi’s net income fell slightly to $ 142.5 million, or 35 cents per share, from $ 152.7 million, or 37 cents per share, a year earlier. Excluding single charges, the company earned 34 cents per share, better than the 25 cents predicted by analysts, according to Refinitiv.
Total revenue fell about 13% to $ 1.331 billion from $ 1.51 million a year earlier. This was better than the $ 1.252 billion forecast by analysts.
The retailer said the double-digit drop in year-over-year sales was mainly due to reduced foot traffic to its stores during the pandemic, as well as the continued closure of stores in some markets. where Covid restrictions have been maintained. In Europe, for example, more than 40 percent of Levi’s stores are currently closed, while others operate part-time, the company said.
Levi’s wholesale revenue fell 4% over the last quarter, an improvement over the previous period.
Direct sales to consumers fell by 26%, due to the decrease in customers who visited Levi’s stores and, above all, in markets that depend 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 41%.
While business trends are improving, profits and sales are expected to continue to have a “significant negative impact” at least during the second quarter of 2021, Levi’s said.
The company raised its outlook for both revenue and profits during the first half of the year, assuming the pandemic did not worsen.
Sales are now expected to grow from 24% to 25% and adjusted profits are expected to range from 41 to 42 cents, implying gains of 7 to 8 cents during the second fiscal quarter. Analysts had demanded second-quarter earnings of 5 cents per share.
Levi’s shares have risen nearly 25% so far. The company has a market cap of $ 10 billion.
Find the full Levi’s press release here.