Levi Strauss & Co. (LEVI) Q3 2021 earnings beat

Denims are displayed at a Levi Strauss retailer in New York, March 19, 2019.

Shannon Stapleton | Reuters

Levi Strauss & Co. on Wednesday reported fiscal third-quarter earnings and gross sales that topped analysts’ expectations, as client demand picked up throughout the back-to-school season and consumers regarded to top off on the most recent denim traits.

Its inventory rose greater than 2% in prolonged buying and selling on the information, having closed the day down greater than 5%.

Though many attire corporations have been hit by international provide chain bottlenecks, Levi has fared properly comparatively on account of its diversified manufacturing. Lower than 4% of its international quantity comes from Vietnam, the corporate stated. Manufacturing amenities there have been arduous hit by periodic shutdowns throughout the pandemic.

“Our provide chain actually is a supply of aggressive benefit,” Chief Govt Chip Bergh instructed CNBC. “We will transfer product round with a number of agility. … We have been operating the enterprise towards totally different eventualities for the final 18 months.”

This is how the corporate did within the three-month interval ended Aug. 29 in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by Refinitiv:

  • Earnings per share: 48 cents adjusted vs. 37 cents anticipated
  • Income: $1.5 billion vs. $1.48 billion anticipated

Internet earnings rose to $193 million, or 47 cents per share, from $27 million, or 7 cents a share, a 12 months earlier. Excluding one-time objects, the corporate earned 48 cents per share. Analysts had anticipated earnings of 37 cents per share.

Income rose 41% to $1.5 billion from $1.06 billion a 12 months earlier. That barely topped estimates of $1.48 billion.

Bergh stated Levi took a roughly $10 million hit to its income on account of provide chain points.

Wholesale income grew 45% 12 months over 12 months, pushed by sturdy demand within the U.S. and Europe, the corporate stated. Direct-to-consumer gross sales rose 34% from 2020 ranges, and climbed 3% on a two-year foundation, as extra consumers visited Levi’s personal brick-and-mortar shops for denim and lounge put on.

Digital transactions have been up 10% 12 months over 12 months and up 76% on a two-year foundation. They accounted for about 20% of Levi’s complete gross sales.

The corporate famous that its earnings benefited from Levi promoting extra objects on to customers and at fuller value factors, quite than utilizing promotions.

The lingering well being disaster continues to be shuttering shops all over the world. Levi stated roughly 10% of its company-operated shops have been closed throughout the newest quarter, primarily in Asia. Roughly 4% stay shut, it stated.

For its fourth quarter, Levi is anticipating year-over-year income development of 20% to 21%, whereas analysts had been calling for a 22% improve. The corporate cautioned its outlook assumes the well being disaster does not dramatically worsen.

It sees fourth-quarter earnings ranging between 38 cents and 40 cents per share, on an adjusted foundation. Analysts had been searching for an adjusted, per-share revenue of 40 cents.

For the total 12 months, Levi sees adjusted earnings within the vary of $1.43 to $1.45 per share, forward of Wall Road’s consensus estimate of $1.33 per share. That means full-year income development of greater than 27%, which might carry gross sales near 2019 ranges.

“Our expectation is that vacation goes to be fairly good,” Bergh stated. “We’re chasing demand proper now, from a provide chain standpoint, to make it possible for everyone can put Levi beneath their Christmas tree.”

The corporate additionally stated Wednesday that its board accredited a brand new $200 million share buyback program throughout the newest quarter.

Levi shares are up about 21% 12 months so far, placing its market worth of $9.76 billion.

Discover the total earnings report right here.