Levi Strauss hikes dividend as Q2 earnings exceed expectations

An indication is posted in entrance of the Levi Strauss & Co. headquarters on April 09, 2021 in San Francisco, California.

Justin Sullivan | Getty Photographs Information | Getty Photographs

Levi Strauss on Thursday reported quarterly income and earnings that got here in above Wall Avenue expectations, because the clothes firm identified for its denim stated it benefitted from Individuals choosing extra relaxed gown codes.

The San Francisco firm elevated its quarterly dividend and stood by its steering for the 12 months. Its shares had been up about 4% at $17.08 in after-hours buying and selling.

This is how Levi carried out for the quarter ending Might 29 in comparison with Wall Avenue estimates based mostly on a survey of analysists by Refinitiv.

• Income: $1.47 billion vs. $1.43 billion anticipated
• Earnings per share: 29 cents adjusted vs. 23 cents anticipated

Levi Straus stated its increased income within the quarter was fueled by each stronger direct-to-consumer and wholesale gross sales. It stated digital income rose 3% globally and accounted for 20% of gross sales within the quarter.

“Denims at the moment are far more acceptable within the workplace,” CEO Chip Bergh advised CNBC in an interview.

The retailer did monitor mid-single-digit declines from a 12 months in the past at its two worth denim manufacturers, which promote at Goal, Walmart and Amazon and make up a small share of the corporate’s general enterprise, Bergh stated.

“So there’s some proof that the extra worth acutely aware client — the decrease revenue client — is beginning to really feel the squeeze and is beginning to make some decisions,” he stated.

However he stated the declines had been greater than offset by the corporate’s core enterprise.

Levi’s income of $1.47 billion for the quarter was up 15% from the $1.27 billion the corporate reported within the year-ago interval. Analysts anticipated $1.43 billion.

Gross sales grew by 17% within the Americas, 3% in Europe and 16% in Asia in comparison with 2021. Levi’s different manufacturers, Dockers and Past Yoga, noticed a rise of 56% in comparison with final 12 months.

The corporate’s promoting, normal and administrative bills had been $779 million within the quarter, increased than the $644 million final 12 months. The corporate attributed the rise to the battle in Ukraine.

For the quarter, the corporate reported a internet revenue of $49.7 million, or 12 cents a share, in contrast $64.7 million, or 16 cents a share, within the year-ago interval. On an adjusted foundation, the corporate stated it earned 29 cents a share in the latest quarter, which was greater than the 23 cents per share Wall Avenue anticipated.

For the total 12 months, the corporate stood by its steering for income to develop 11% to 13% from a 12 months in the past. It nonetheless expects adjusted earnings of $1.50 to $1.56 per share.

The corporate hiked its quarterly dividend to 12 cents a share, up from 10 cents a share.

Harmit Singh, Levi’s chief monetary officer, advised CNBC that the corporate determined to reaffirm its fiscal 2022 outlook however to extend its dividend given the lingering results on the battle abroad, the potential slowdown of the worth acutely aware client, continued Covid lockdowns in China and forex modifications.

Learn the corporate’s earnings launch right here.

CNBC’s Lauren Thomas contributed to this report.