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.