Levi Strauss & Co. (LEVI, Financial) released its first-quarter earnings after the market closed on April 7. The company posted higher-than-expected earnings and revenue for the quarter.
By the numbers
The San Francisco-based manufacturer of denim products posted adjusted earnings of 40 cents per share, which exceeded Wall Street’s expectations of 35 cents. Revenue of $1.5 billion surged 5% on a year-over-year basis and surpassed estimates of $1.47 billion.
Reflecting on the company’s performance, Executive Vice President and Chief Financial Officer Harmit Singh said:
"Significant gross margin expansion, lower inventory and higher earnings all contributed to strong financial performance in the first quarter of 2020. In the short term we are reducing costs and capital spend while managing inventory and gross margins. We've built a healthy balance sheet that provides us significant liquidity to both weather the storm in the near term and emerge from this stronger, with our long-term growth algorithm intact.”
Segment revenue
Sales grew 4% in the U.S. and 10% in Europe as both segments experienced robust demand in the direct-to-consumer and wholesale businesses.
In Asia, sales declined 2%. While Levi Strauss witnessed strong growth across key markets, it was forced to shut down stores in the region due to the coronavirus outbreak. As a result, it is projecting a $20 million loss.
Effects of Covid-19
Levi Strauss noted its business in China saw double-digit revenue growth in the first quarter before the coronavirus outbreak began. The company shut down almost all its stores in China by the end of the quarter. Since then, some locations have reopened.
As the pandemic has escalated quickly since mid-March, the company has temporarily closed down all its company-operated and franchise stores in U.S. and Europe. Looking ahead to the second quarter, the store closures will definitely have an impact on its financial results.
Guidance
Levi Strauss did not issue any guidance figures for earnings or revenue, citing the global uncertainty caused by the pandemic as the reason.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
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