Levi Strauss raises dividend as Q2 results beat expectations

A sign is posted in front of the Levi Strauss & Co. headquarters on April 09, 2021 in San Francisco, California.

Justin Sullivan | News from Getty Images | Getty Images

Levi Strauss on Thursday reported quarterly revenue and profits that beat Wall Street expectations as the clothing company known for its denim said it has benefited as Americans are adopting more relaxed dress codes.

The San Francisco-based company increased its quarterly dividend and maintained its full-year guidance. Its shares are up about 4% in after-hours trading to $17.08.

Here’s how Levi performed for the quarter ended May 29, compared to Wall Street estimates based on a survey of analysts by Refinitiv.

  • Revenue: $1.47 billion versus $1.43 billion expected
  • Earnings per share: 29 cents adjusted versus 23 cents expected

Levi Straus said its higher revenue for the quarter was driven by both stronger direct and wholesale sales. Digital revenue rose 3% globally and accounted for 20% of revenue for the quarter.

“Jeans are much more acceptable in the office now,” CEO Chip Bergh said in an interview with CNBC.

The retailer saw a mid-single-digit decline year-over-year in its two premium denim brands, which are sold at Target, Walmart and Amazon and make up a small percentage of the company’s overall business, Bergh said.

“So there’s evidence that the more value-conscious consumer — the lower-income consumer — is starting to feel the pressure and starting to make some decisions,” he said.

But he said the declines were more than offset by the company’s core business.

Levi’s revenue of $1.47 billion for the quarter increased 15% from the $1.27 billion the company reported in the prior-year period. Analysts expected $1.43 billion.

Compared to 2021, sales increased by 17% in America, by 3% in Europe and by 16% in Asia. Levi’s other brands, Dockers and Beyond Yoga, were up 56% year over year.

The company’s selling, general and administrative expenses were $779 million for the quarter, up from $644 million in the prior year. The company attributed the increase to the conflict in Ukraine.

For the quarter, the company reported net income of $49.7 million, or 12 cents a share, compared to $64.7 million, or 16 cents a share, in the year-ago period. On an adjusted basis, the company said it earned 29 cents a share last quarter, which was higher than the 23 cents a share Wall Street was expecting.

For the full year, the company stuck to its guidance for revenue growth of 11% to 13% year over year. Adjusted earnings are still expected to be in the range of $1.50 to $1.56 per share.

The company increased its quarterly dividend to 12 cents per share from 10 cents per share.

Harmit Singh, Levi’s chief financial officer, told CNBC that the company decided to reiterate its fiscal 2022 outlook, but is increasing its dividend in light of the ongoing impact of the overseas war, the potential slowdown for the value-conscious consumer, the ongoing Covid lockdowns in China and currency increase changes.

Read the company’s earnings announcement here.

CNBC’s Lauren Thomas contributed to this report.

https://www.cnbc.com/2022/07/07/levi-strauss-hikes-dividend-as-q2-earnings-exceed-expectations.html Levi Strauss raises dividend as Q2 results beat expectations

Drew Weisholtz

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