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

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

An staff holds a procuring bag even though ringing up a buyer at the Levi Strauss & Co. flagship shop in San Francisco, March 18, 2019.

David Paul Morris | Bloomberg | Getty Pictures

Denim retailer Levi Strauss & Co. on Tuesday noted fiscal to start with-quarter earnings and earnings that topped analysts’ estimates as it marketed far more of its denims and T-shirts at increased cost details, frequently directly to shoppers.

Levi also reaffirmed its forecast for fiscal 2022, assuming no significant worsening of inflationary pressures or closures of international economies. It took into account any strike from its modern choice to temporarily suspend organization in Russia, which represents approximately 2% of its complete sales.

The retailer has however to see shoppers trade down for less expensive clothing, even as every little thing from gasoline selling prices to grocery bills surge, Levi CEO Chip Bergh advised CNBC in a telephone job interview. And still, as the organization has lifted charges on some objects to offset other costs within just the organization, buyer demand from customers has remained robust, he additional.

To be positive, Bergh mentioned Levi is preserving a close eye on customer demand from customers, knowing that projections of a looming recession have been rising amid economists. “We you should not have our head in the sand,” the CEO claimed. “If we see [demand] beginning to get wobbly, we will consider the proper action.”

Levi shares rose all around 1.5% in prolonged buying and selling, after closing the day down 1.5%.

Here’s how Levi did for the 3-month time period ended Feb. 27 when compared with what Wall Road was anticipating, dependent on a study of analysts by Refinitiv:

  • Earnings per share: 46 cents altered vs. 42 cents anticipated
  • Income: $1.59 billion vs. $1.55 billion predicted

Levi documented internet money of $196 million, or 48 cents per share, in contrast with internet money of $143 million, or 35 cents a share, a yr previously. Excluding a single-time items, it gained 46 cents a share, superior than the 42 cents that analysts experienced been on the lookout for.

Income rose 22% to $1.59 billion from $1.31 billion a calendar year before. That topped anticipations for $1.55 billion.

Levi explained it took a approximately $60 million strike to sales because of to source chain constraints for the duration of the hottest period of time. Its international immediate-to-shopper product sales rose 35% from the prior-12 months period, and wholesale income was up 15%.

While Levi nonetheless partners with large-box suppliers this kind of as Concentrate on and division merchants like Macy’s to offer its jeans, the enterprise has increasingly pushed shoppers toward its individual brick-and-mortar merchants and internet site. Not only can individuals transactions be far more lucrative, but it makes it possible for Levi to make much better relationships with buyers and obtain additional insights on their searching practices. Direct-to-customer represented 39% of whole product sales in the quarter, up from 38% in the preceding period and 36% a 12 months ago, the firm mentioned.

Broken down by location, revenue climbed 26% in the Americas, rose 13% in Europe, and grew 11% in Asia on a yr-above-calendar year basis.

Levi reaffirmed its outlook for fiscal 2022, which phone calls for profits to increase between 11% and 13% calendar year in excess of year. Analysts have projected an increase of 11.8%.

The retailer however sees its once-a-year for each-share earnings ranging involving $1.50 and $1.56, compared with analysts’ outlook of $1.54.

“The denim class is expanding in a lower-double-digit [rate] relative to where by it was in advance of pandemic,” Main Fiscal Officer Harmit Singh told CNBC, declaring “the entire world continues to turn into a ton additional relaxed.”

Singh extra: “We have observed desire in March maintain the momentum, and that presents us assurance about the rest of the 12 months.”

Discover the whole earnings push launch from Levi right here.