Levi Strauss Rises on Upbeat Q1 Results

Clothing major Levi Strauss & Co. (NYSE: LEVI) recently reported better-than-expected results for the first quarter ended February 27, 2022. The robust results can be attributed primarily to the overall growth witnessed in net revenues.

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Following the results, shares of the company rose 3% to close at $19.99 in Wednesday’s extended trading session.

Revenue & Earnings

For the first quarter, Levi Strauss reported quarterly net revenues of $1.6 billion, up 22% year-over-year. Further, the figure outpaced the consensus estimate of $1.54 billion. The company’s Global Direct-to-Consumer and Global Wholesale segments grew 35% and 15%, respectively, during the quarter.

Levi Strauss’ earnings per share (EPS) for the quarter stood at $0.46, up 35.3% from the same quarter last year. Further, the figure surpassed the consensus estimate of $0.41 per share.

Other Operating Metrics

The company’s EBIT margin improved from 13.3% in the prior year to 14.9%. Further, its adjusted gross margin improved from 57.7% in the previous year to 59.4%

LEVI ended the quarter with total liquidity of about $1.6 billion and net debt of $248 million.

Management Commentary

The CEO of Levi Strauss, Chip Bergh, said, “We started the year with strong consumer demand and solid momentum across geographies, channels and categories. Our teams’ disciplined execution of our strategic priorities enabled us to deliver strong top and bottom-line growth as we capitalize on structural tailwinds and successfully manage a dynamic operating environment. The strength of our brands and strategy position us to deliver sustainable growth well into the future.”

Stock Rating

Consensus among analysts is a Strong Buy based on seven unanimous Buys. LEVI’s average price forecast of $30 implies upside potential of 54.6% from current levels. Shares have declined 20.7% over the past year.

Positive Sentiments

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on LEVI, as 0.9% of portfolios tracked by TipRanks increased their exposure to LEVI stock over the past 30 days.

Conclusion

Although the stock has been a laggard, like most apparel lifestyle brands, over the past year due to headwinds like lockdowns, supply chain constraints and geopolitical events, the company now stands to benefit from the rapid reopening of the economy and increased demand, which can also be gauged from its solid financial results and robust liquidity position.

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