An employee holds a shopping bag while calling a customer at the Levi Strauss & Co. pilot store. from San Francisco, March 18, 2019.
David Paul Morris | Bloomberg | Getty Images
Levi Strauss & Co. reported a double-digit drop in sales for the first fiscal quarter on Thursday, as ongoing store closures in Europe and eased pedestrian traffic in the US due to the Covid pandemic affected results.
But the denim maker has boosted its sales and profit prospects for the first half of the year, assuming the global health crisis will not get worse here. CFO Harmit Singh said in an interview with CNBC that the company anticipates that sales will return in 2019, pre-pandemic levels by the fourth quarter.
Its shares increased by more than 6% in trading after the program.
“These results indicate very good evidence that we will pull a stronger company out of the pandemic,” CEO Chip Bergh told CNBC. “We meet our own expectations internally [and] exceeds external expectations, despite the fact that a third of our stores were closed in Europe throughout the quarter. “
Here is how the company did for its quarter ended February 28, compared to what analysts anticipated, based on a survey conducted by Refinitiv:
- Earnings per share: 34 cents adjusted compared to 25 cents expected
- Revenue: $ 1.31 billion compared to $ 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. Excluding single taxes, the company earned 34 cents per share, better than the 25 cents forecast by analysts, according to Refinitiv.
Total revenue fell about 13 percent to $ 1.31 billion from $ 1.51 billion a year earlier. This came in better than analysts’ $ 1.25 billion forecast.
The retailer said the double-digit drop in sales from one year to the next was primarily due to reduced foot traffic in its stores during the pandemic, as well as the continued closure of stores in some markets where Covid restrictions remained in place. force. In Europe, for example, more than 40 percent of Levi’s stores are currently closed and others are part-time, the company said.
Levi’s wholesale revenues fell 4% in the last quarter, marking an improvement on the previous period.
Direct sales to consumers fell by 26%, due to the lower number of customers visiting Levi’s stores and especially in tourism-based markets. The decline was partially offset by a 25 percent increase in the company’s e-commerce sales during the quarter, Levi’s said. Total online revenue, which includes digital sales from wholesale partners, rose 41%.
Although business trends are improving, revenue and sales are expected to continue to be “significantly negatively affected” at least until the second quarter of 2021, Levi’s said.
The company raised 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 between 24% and 25%, and adjusted earnings are estimated to be between 41 and 42 cents, which means gains from 7 cents to 8 cents during the second fiscal quarter. Analysts demanded gains in the second quarter of 5 cents per share.
Levi shares have risen by almost 25% so far. The company has a market cap of $ 10 billion.
Find the full press release from Levi’s here.