Levi Strauss Earnings Watch, Market Share Gains Boosting Apparel Margins

Iconic American blue jean maker Levi Strauss & Co. reports second quarter earnings after the market closes on Thursday, July 7th. $LEVI posted improved earnings and revenue for the first quarter ended in February. Levi Strauss has benefited from growth in its direct-to-consumer and e-commerce businesses, though it has had to confront inflation and supply chain constraints. Analysts are projecting revenue of $1.43Billion and EPS of $0.23.

Levis Denim

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Levi Strauss & Co. NYSE: LEVI Report Earnings After Close Thursday

$0.23 Expected And $1.43 billion Revenue Forecast

Levi Strauss and Co. report second quarter of fiscal 2022 Thursday. Analysts are projecting revenue of $1.43 billion and EPS of $0.23 will be reported. That would be sales up about 10% year over year and a slowdown from the prior quarter’s 22% increase while still setting new global sales records for the business.

Last quarter Levi’s sales trends were strong, although there were signs of stress on consumer spending. Since then, consumer sentiment has hit a record low which is a major concern for a retailer. Sales rose 22% with a 26% spike in the core U.S. market. Levi surprised last quarter with increases in gross and operating profit margins, rising prices and higher demand for premium products offset the surge in costs.

“We started the year with strong consumer demand and solid momentum,” CEO Chip Bergh said in a press release.


Since the onslaught of the inflation crush and supply shortage investors are looking for guidance going forward.

For Levi’s investors will focused on two metrics, the company’s outlook and inventory levels. Levi last quarter called for sales to rise by between 11% and 13% as earnings improve to around $1.50 per share in fiscal 2022. The expectation from investors is a downgrade as we saw with Nike earnings due to worsening consumer spending trends.

Management built up inventory in the first quarter to help minimize supply chain challenges. The question here will be how much of the tough economic environment hurt sales? Rising inventory levels might point to tougher selling conditions ahead. Excess inventory when demand is accelerating is good, the flip said is not as leaves potentially out of fashion stock.

LEVI in Bank of America’s list of top SMID cap ideas

Following the sharp drop in share price, Levi Strauss was recently added to Bank of America’s list of top SMID cap ideas list for the second half of 2022. The firm believes the stock will continue to benefit from the casualization/denim cycle as the apparel seller continues to gain market share position.

“Furthermore, from a margin perspective, we expect outsized growth from margin accretive categories such as women’s, tops, international, and Beyond Yoga will help offset margin headwinds from a normalization in promotional activity,” updated BofA.

Levi Strauss IPO

Levi Strauss went public for a second time on March 21, 2019. The 166-year-old company first went public in 1971 but has been a private company for the last 34 years.   Levi Strauss & Co. began trading at $22.22 a share, after having priced its initial public offering at $17 a share the night prior. The stock surged more than 30% on its first day of trading. Levi closed at $21.88 on Tuesday ahead of earning. 

Source: Traderscommunity

From The TradersCommunity Research Desk