Levi Strauss & Co. (LEVI) beats third quarter 2021 profits

Jeans are on display at a Levi Strauss store in New York City on March 19, 2019.

Shannon Stapleton | Reuters

Levi Strauss & Co. reported third-quarter earnings and sales on Wednesday that exceeded analysts’ expectations, as consumer demand accelerated during the comeback and buyers looked to stock up on the last few. denim trends.

Its stock rose more than 2% in extended news trading, after closing the day down more than 5%.

While many apparel companies have been hit by bottlenecks in the global supply chain, Levi has done pretty well thanks to its diverse manufacturing. Less than 4% of its global volume comes from Vietnam, the company said. Production facilities there have been hit hard by periodic shutdowns during the pandemic.

“Our supply chain is truly a source of competitive advantage,” CEO Chip Bergh told CNBC. “We can move the product with a lot of agility.… We have run the company against different scenarios over the past 18 months.”

Here’s how the company performed in the three-month period ended August 29 compared to what Wall Street expected, based on an analyst survey by Refinitiv:

  • Earnings per share: 48 cents adjusted vs. 37 cents expected
  • Turnover: $ 1.5 billion against $ 1.48 billion expected

Net income reached $ 193 million, or 47 cents per share, from $ 27 million, or 7 cents per share, a year earlier. Excluding one-time items, the company earned 48 cents per share. Analysts were forecasting earnings of 37 cents per share.

Revenue rose 41% to $ 1.5 billion from $ 1.06 billion a year earlier. This slightly exceeded estimates of $ 1.48 billion.

Bergh said Levi received roughly $ 10 million in earnings due to supply chain issues.

Wholesalers’ revenue grew 45% year-over-year, driven by strong demand in the United States and Europe, the company said. Direct-to-consumer sales increased 34% from 2020 levels and 3% on a two-year basis, as more shoppers visited Levi’s own physical stores for denim and loungewear.

Digital transactions grew 10% year over year and 76% on a two-year basis. They made up about 20% of Levi’s total sales.

The company noted that its profits benefited from Levi selling more items direct to consumers and at higher prices, rather than using promotions.

The persistent health crisis is still closing shops around the world. Levi said about 10% of its company stores were closed in the last quarter, mostly in Asia. About 4% remain closed, he said.

For its fourth quarter, Levi expects year-over-year revenue growth of 20% to 21%, as analysts called for a 22% increase. The company warned that its outlook assumed the health crisis would not worsen significantly.

He sees fourth quarter earnings of between 38 cents and 40 cents per share, on an adjusted basis. Analysts were looking for adjusted earnings per share of 40 cents.

For the full year, Levi is forecasting adjusted earnings in the range of $ 1.43 to $ 1.45 per share, ahead of Wall Street’s consensus estimate of $ 1.33 per share. This implies full-year revenue growth of over 27%, which would bring sales closer to 2019 levels.

“We expect the holidays to be pretty good,” Bergh said. “We’re pursuing demand right now, from a supply chain perspective, to make sure everyone can put Levi under their Christmas tree.”

The company also said on Wednesday that its board of directors approved a new $ 200 million share buyback program in the last quarter.

Levi’s shares have risen about 21% year-to-date, bringing its market value to $ 9.76 billion.

Find the full earnings report here.

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