Levi Strauss & Co. (LEVI) reports Q1 2022 earnings beat

Annette K. Brown

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An personnel retains a procuring bag though ringing up a customer at the Levi Strauss & Co. flagship retailer in San Francisco, March 18, 2019.

David Paul Morris | Bloomberg | Getty Illustrations or photos

Denim retailer Levi Strauss & Co. on Tuesday claimed fiscal to start with-quarter earnings and revenue that topped analysts’ estimates as it bought more of its jeans and T-shirts at larger price tag points, often specifically to buyers.

Levi also reaffirmed its forecast for fiscal 2022, assuming no sizeable worsening of inflationary pressures or closures of world wide economies. It took into account any hit from its the latest conclusion to briefly suspend business enterprise in Russia, which signifies roughly 2% of its overall gross sales.

The retailer has nonetheless to see customers trade down for fewer costly attire, even as everything from gasoline price ranges to grocery expenses surge, Levi CEO Chip Bergh instructed CNBC in a cellular phone interview. And still, as the company has raised prices on some objects to offset other fees in just the enterprise, client desire has remained strong, he added.

To be sure, Bergh stated Levi is retaining a shut eye on shopper demand from customers, realizing that projections of a looming recession have been growing among economists. “We you should not have our head in the sand,” the CEO mentioned. “If we see [demand] commencing to get wobbly, we will choose the correct motion.”

Levi shares rose all-around 1.5% in prolonged trading, right after closing the working day down 1.5%.

Here is how Levi did for the three-thirty day period period of time ended Feb. 27 as opposed with what Wall Street was anticipating, based on a study of analysts by Refinitiv:

  • Earnings for every share: 46 cents adjusted vs. 42 cents envisioned
  • Profits: $1.59 billion vs. $1.55 billion anticipated

Levi noted net money of $196 million, or 48 cents per share, in comparison with net profits of $143 million, or 35 cents a share, a calendar year before. Excluding a person-time things, it acquired 46 cents a share, better than the 42 cents that analysts had been hunting for.

Earnings rose 22% to $1.59 billion from $1.31 billion a year previously. That topped expectations for $1.55 billion.

Levi explained it took a about $60 million hit to profits thanks to supply chain constraints during the hottest period. Its worldwide direct-to-buyer sales rose 35% from the prior-12 months period of time, and wholesale earnings was up 15%.

Even though Levi even now associates with large-box merchants this kind of as Concentrate on and office stores like Macy’s to market its jeans, the corporation has increasingly pushed consumers toward its possess brick-and-mortar merchants and web site. Not only can those transactions be more profitable, but it makes it possible for Levi to construct more powerful relationships with purchasers and obtain more insights on their searching practices. Direct-to-shopper represented 39% of total income in the quarter, up from 38% in the previous period of time and 36% a 12 months ago, the business explained.

Broken down by location, gross sales climbed 26% in the Americas, rose 13% in Europe, and grew 11% in Asia on a 12 months-about-year basis.

Levi reaffirmed its outlook for fiscal 2022, which calls for income to increase concerning 11% and 13% year more than yr. Analysts have projected an enhance of 11.8%.

The retailer however sees its annual for each-share earnings ranging among $1.50 and $1.56, when compared with analysts’ outlook of $1.54.

“The denim classification is increasing in a low-double-digit [rate] relative to where by it was in advance of pandemic,” Chief Economic Officer Harmit Singh told CNBC, expressing “the globe continues to grow to be a lot extra everyday.”

Singh additional: “We have observed demand in March sustain the momentum, and that offers us assurance about the rest of the yr.”

Find the entire earnings push launch from Levi in this article.

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