Levi Strauss could rebound from a 16% loss, Strong Q1 data

On Friday, the stock price of Levi Strauss is projected to bounce back amid robust fiscal first-quarter earnings.

The clothing company’s shares fluctuated by 16.03% to $15.14 apiece on Thursday. Yet, it is forecasted to gain ground by 0.46% in the upcoming session.

On April 06, Levi Strauss announced that its earnings per share remained elevated at 34 cents, surpassing analysts’ 32-cent estimates.

Besides, its sales revenue grew by 6.00% year-over-year to $1.70 billion. This latest reading is higher than the market projection of $1.62 billion. Also, it is above the former record of $1.60 billion.

Further, the entity’s DTC net revenue rose by 12.00% on an annual basis. It is driven by wide-based improvements in company-operated stores and eCommerce across all segments. This data comprised 42.00% of the firm’s total sales.

Moreover, Levi Strauss’ wholesale net revenues jumped by 2.00% YoY. This increase is due to a solid growth in Asia, Canada, and the United States.

During the earnings call, executives attributed these gains to steady demand for jeans and non-denim outfits despite high inflation.

For the full-year 2023, the company reiterated a revenue consensus of between $6.30 billion and $6.40 billion. Besides, it maintains an adjusted EPS that ranges from $1.30 and $1.40 per share.

Margin Crunch in 2023

Meanwhile, the firm’s plunge on Thursday is due to its warning of a margin crunch this year. It explained that it has to offer higher promotions compared to previous expectations. Also, it disclosed its current headwinds with higher costs.

According to an analyst, Levi Strauss could not protect its margins from soaring freight, labor, and cotton prices.

Furthermore, bulging stockpiles forced it to come after its peers in increasing discounts and promotions to clear its products.

Yet, it had difficulty gaining customers despite higher promotions, feeling the tweak for its Signature and Denizen brands.