Levi Strauss & Co. (LEVI) reports Q1 2022 earnings beat

An employee holds a shopping bag while ringing a customer at the Levi Strauss & Co. flagship store in San Francisco on March 18, 2019.

David Paul Morris | Bloomberg | Getty Images

Denim Retailer Levi Strauss & Co. Financial on Tuesday reported first-quarter earnings and revenue that topped analysts’ estimates as it sold its jeans and T-shirts at higher prices, often directly to customers.

Assuming there is no significant downturn in inflationary pressures or a shutdown of the global economy, Levy has reaffirmed his forecast for 2022. It also considers any blows from the recent decision to suspend business in Russia, which represents about 2% of its total sales.

Levy CEO Chip Berg told CNBC in a phone interview that retailers have yet to see consumer transactions in everything from petrol prices to grocery bills for less expensive clothing. And while the company has increased the price of some items to offset other costs in the business, consumer demand remains strong, he said.

To be sure, Berg said Levy is keeping a close eye on consumer demand, knowing that recession estimates are growing among economists. “We don’t have heads in the sand,” the CEO said. “If we look [demand] We will take appropriate action if it starts to falter. “

While Levy still partners with big-box retailers like Target and department stores like Messi to sell its jeans, the company is increasingly pushing customers to its own brick-and-mortar stores and websites. Not only can those transactions be more profitable, but it also allows Levi to build stronger relationships with buyers and gain more insight into their browsing habits. The direct-to-consumer quarter represented 39% of total sales, up from 38% in the previous period and up from 36% a year earlier, the company said.

Here is how Levy did in the three-month period ending February 26, compared to what Wall Street expected, based on a survey by Refinitive analysts:

  • Earnings per share: 46 cents adjusted vs. 42 cents expected
  • Revenue: 1.59 billion vs. 5 1.55 billion expected

Levy reported net income of $ 196 million or 48 cents per share, compared to $ 143 million or 35 cents per share a year ago. Excluding one-time items, it gained 46 cents per share, better than the 42 cents analysts were looking for.

Revenue rose 22% to $ 1.59 billion from $ 1.31 billion a year earlier. This is at the top of the 1.55 billion expectation.

Levy says it has received about $ 60 million in sales in recent times due to supply chain constraints. Its global direct-to-consumer sales increased 35% over the previous year and wholesale revenue increased 15%.

Regionally, sales rose 26% in the US, 13% in Europe, and 11% year-on-year in Asia.

Levy has reaffirmed its vision for fiscal year 2022, calling for revenue growth of between 11% and 13% per annum. Analysts have estimated an increase of 11.8%.

The retailer still sees its annualized earnings per share between $ 1.50 and $ 1.56, compared to analysts ’view of 4 1.54.

“The denim category is growing in low-double-digits [rate] “The world is becoming much more casual,” Harmeet Singh, chief financial officer, told CNBC.

Singh added: “We have seen demand keep pace in March and it gives us confidence about the rest of the year.”

Find the full earnings press release from Levi here.

This story is evolving. Please look back for updates.

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