By
Bloomberg
Published
Apr 4, 2024
Levi Strauss & Co. jumped after higher-than-expected sales and profit in the first quarter helped fuel a more optimistic full-year outlook.
The retailer, which announced a cost-cutting and productivity plan in January, said those measures are now paying off. It also cited market-share gains. Adjusted earnings per share of 26 cents exceeded the average analyst estimate of 21 cents, while gross margin, a gauge of profitability, also beat expectations in the three months ended Feb. 25.
The shares rose 6.3% at 4:18 p.m. in late trading in New York. The stock has gained 13% this year through Wednesday’s close, more than three times the advance of the Dow Jones Industrial Average.
Revenue also outpaced expectations, falling less than expected despite weakness in Levi’s wholesale business. The company is focusing on its direct-to-consumer operations, which include Levi’s own stores and website. Sales from the so-called DTC division rose 7% in the quarter, while wholesale revenue from third-party retail partners fell 18%.
“Wholesale will still continue to be an important part of our business moving forward,” Levi Chief Executive Officer Michelle Gass said in an interview, noting that the company expects improvement in the latter part of the year. “Yes, the majority of our big growth will come from DTC, but wholesale extends our reach, which is critical.”
Gass, who took over as CEO in January, has focused on introducing new styles such as baggy jeans, denim skirts and dresses, and non-denim activewear pants. These products have helped drive demand and are beginning to support wholesale growth, she said.
Levi raised its full-year profit guidance by 2 cents from its previous outlook and now sees earnings per share for the period in a range of $1.17 to $1.27. Chief Financial Officer Harmit Singh attributed the improvement to better expense control.