Levi Strauss & Co

Levi Strauss ⁢& Co. Reports Strong Q3 2024 Results,Raises Full-year Outlook

Levi ⁣Strauss & Co. (LEVI) announced robust financial results for the third quarter of fiscal year 2024, exceeding wall Street expectations and prompting an⁢ upward ‍revision of its full-year guidance.⁤ The company reported earnings per share of 34 cents (adjusted) versus the 31 cents anticipated by analysts surveyed by⁤ LSEG. revenue reached $1.54 billion, surpassing⁣ the expected $1.50 billion. Despite the ⁤positive results, shares experienced a decline of over 6% in extended trading, following a 42% climb earlier in the year.

Net income for the quarter ending August 31, 2024, totaled $218 million, or 55⁤ cents per share, a notable increase ‍compared to the $20.7 million, or 5 cents per share,⁣ reported‌ in‍ the‌ same period last year.

the company attributes its success​ to several key strategies under the leadership of ​CEO Christopher Gass, including a focus on direct-to-consumer sales, expansion beyond conventional denim offerings, and attracting more female customers. Direct-to-consumer revenue grew by 11% during the quarter, fueled by strength in the U.S. market. Women’s sales also⁤ saw ⁣a 9% increase. Notably, apparel beyond denim now accounts for nearly 40% of the company’s business, with⁤ tops experiencing a 9% growth in sales during the quarter.

While Levi’s has implemented “surgical” and “thoughtful” price increases, CFO Harmit singh emphasized that the majority of revenue growth is not driven⁤ by price hikes. The company is also benefiting from reduced discounting and higher margins through direct sales channels (website and stores) versus wholesale partnerships. Price increases ⁢are contributing to ⁣improved margins.

Looking ahead, Levi’s now anticipates full-year sales⁣ to increase by ⁣3%, a significant jump from its​ previous guidance ⁤of 1%​ to 2% growth. This revised ⁢forecast surpasses the 2.9% ​decline previously expected by LSEG. Adjusted earnings per share are projected to be between $1.27 and $1.32, up from the prior range of $1.25 to⁢ $1.30, aligning with Wall Street’s estimate ⁣of $1.31 per share. The company expects an operating margin between⁤ 11.4% and 11.6%, in line⁣ with expectations of 11.6%.

Levi’s also reaffirmed⁤ its original gross margin ​outlook for the year, anticipating a​ 1 percentage point increase, after temporarily adjusting it downward due to recently implemented⁢ U.S. tariffs on imports from China ⁣(currently at 30%) ⁢and rest-of-world duties (at 20%). The company’s outlook is contingent on these tariff rates remaining stable for the remainder of the‌ year.

Despite the positive outlook,⁣ Levi’s management⁣ maintains a “prudent” and “conservative” approach, acknowledging ongoing macroeconomic volatility.