An employee holds a shopping bag while calling a customer at the Levi Strauss & Co. flagship store in San Francisco, March 18, 2019.
David Paul Morris | Bloomberg | Getty Images
Levi Strauss & Co. reported a decline in double-digit sales for its fiscal first quarter on Thursday as the continued closure of stores in Europe and easing foot traffic in the U.S. due to the Covid pandemic outweigh the results.
But the denim manufacturer has increased its sales and profit outlook for the first half of the year, assuming the global health crisis does not get worse from here on out. CFO Harmit Singh said in an interview with CNBC that the company expects sales to return to the fourth quarter after 2019, the pre-pandemic levels.
The stock jumped more than 6% in the after-hours trading.
“These results indicate very good evidence that we will emerge a stronger company from the pandemic,” CEO Chip Bergh told CNBC. “We beat our own expectations internally [and] beat external expectations, although a third of our stores in Europe were closed throughout the quarter. ‘
This is how the company ended its quarter ended February 28 compared to what analysts had expected, based on a survey by Refinitiv:
- Earnings per share: 34 cents adjusted to 25 cents expected
- 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. If there is no one-time cost, the company has earned 34 cents a share, better than the 25 cents analysts predicted, according to Refinitiv.
Total revenue fell 13% to $ 1.31 billion from $ 1.51 billion a year earlier. It came better than the $ 1.25 billion forecast by analysts.
The retailer said the year-on-year decline in sales was mainly due to the reduced foot traffic in its stores during the pandemic, as well as the ongoing store closure in some markets where Covid restrictions remain in place. In Europe, for example, more than 40% of Levi’s stores are currently closed, while others have fewer jobs, the company said.
Levi’s wholesale revenue fell 4% during the last quarter, which was an improvement over the previous period.
Sales directly to the consumer fell by 26% as fewer customers visited Levi’s stores, especially in tourism-dependent markets. Levi’s says the decline was partially offset by a 25% increase in e-commerce sales in the company during the quarter. Total online revenue, which includes digital sales from wholesale partners, increased by 41%.
Although trends in the business are improving, earnings and sales are expected to be “significantly adversely affected” at least during the second quarter of 2021, Levi’s said.
The company increased its outlook for both revenue and profit in the first half of the year, assuming the pandemic does not worsen.
Sales are now expected to grow by 24% to 25%, and adjusted earnings are expected to be between 41 cents and 42 cents, meaning earnings of 7 cents to 8 cents in the second quarter. Analysts demanded a return of five cents per share in the second quarter.
Levi’s shares have risen nearly 25% to date. The company has a market capitalization of $ 10 billion.
Find the full press release of Levi’s here.