Levi Strauss Earnings Boost From Surge in European Sales

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Levi Straus $LEVI Q2 Earnings Miss

Pre-market 13.25 −0.58 (4.19%)
The San Francisco-headquartered company reported a net loss of $364 million, or 91 cents a share, compared with net income of $29 million, or earnings of 7 cents per share, a year ago.
Excluding one-time charges, Levi’s lost 48 cents a share.
Adjusted loss per share: 48 cents
Revenue: $498 million -62% from $1.31 billion a year ago.
Cutting 15% of corporate workforce, about 700 jobs.
A complete recovery “will likely take some time,” CEO

The loss was largely due to $242 million in restructuring charges and inventory costs related to disruptions from the pandemic, the company said.

Analysts were calling for Levi’s to report an adjusted loss of 49 cents per share on revenue of $486 million, according to Refinitiv data.

The company said losses were partially offset by its e-commerce business, which grew 25% during the second quarter, making up 15% of total net revenue during the period, compared with just 5% a year prior.

Still, sales in its Americas region were down 59% overall. They dropped 68% in Europe and 61% in Asia.

“Unlike a number of our peers … we took the brunt of this in one quarter,” Bergh told CNBC in a phone interview.

Now, with about 90% of stores back up and running, roughly 40% are reporting sales growth compared with last year, in some instances exceeding the company’s internal expectations, he said in the interview.

But Levi’s has plans in place in case it needs to shut a number of those doors again. Apple has taken the lead and closed dozens of stores in states like Florida and Texas for a second time, with Covid-cases still on the rise in certain hot spots. According to Bergh, Levi’s has about 40 locations in the U.S. that it is currently monitoring closely, checking them every Monday, Wednesday and Friday. “There are several doors getting close,” he said.

Inventories ended the second quarter up 10%, Levi’s said.

According to Bergh, much of Levi’s merchandise is “evergreen,” meaning the company can stow it away and it will still be in style next season.

Levi’s said it ended the quarter with total liquidity of roughly $2 billion, with $448 million still available under the company’s revolving credit facility.

The company is not offering a 2020 outlook at this time.

Levi’s shares are down about 27% from a year ago. The company has a market cap of $5.5 billion.