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Levi Strauss & Co. (LEVI) reaffirms 2022 outlook, boosts guidance


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 & Co. on Wednesday maintained its outlook for the total yr and boosted its monetary targets over the following 5 years because the denim retailer grows its e-commerce enterprise.

The corporate views itself as a lot stronger than it was earlier than the Covid pandemic and since its public market debut in March 2019.

“We’re reaffirming full-year steerage, regardless of all of the headwinds,” Chief Monetary Officer Harmit Singh mentioned in an interview, forward of Levi’s annual investor day occasion. “The developments we’re seeing within the enterprise give us confidence,” Singh mentioned. “We’re trying on the quick time period, whereas additionally not dropping sight of the long run.”

In latest weeks, retailers from Walmart to Abercrombie & Fitch have alluded to the challenges that they’re going through, from ongoing provide chain issues and mismatched inventories, to red-hot inflation and a possible pullback in shopper spending.

Retail executives have mentioned that lower-income customers are already feeling the pinch of upper costs on items and adjusting their budgets accordingly, whereas wealthier households are splurging on new outfits, makeup and luggage for summer travel. The cut up in conduct has resulted in an identical divide within the retail trade. To date this earnings season, luxurious and high-end manufacturers — from Canada Goose to Michael Kors father or mother Capri Holdings — have largely outperformed companies that cater to price-conscious shoppers.

Levi does not anticipate the risky financial backdrop will dent demand for its denims.

It now sees annual income rising in a spread of 6% to eight%, up from prior targets of 4% to six%, via 2027. If achieved, that might convey Levi’s income near $10 billion 5 years from now.

For fiscal 2022, it still projects sales to increase between 11% and 13% from 2021 levels, with adjusted earnings per share falling inside a spread of $1.50 to $1.56. Analysts had been in search of income to rise 11.8%, with Levi incomes a per-share adjusted revenue of $1.55, based on Refinitiv knowledge.

By 2027, Levi mentioned it goals to develop its direct-to-consumer enterprise to 55% of complete gross sales and triple e-commerce income.

Levi’s direct enterprise accounted for about 36% of complete gross sales within the retailer’s newest fiscal yr that ended Nov. 28. Digital income, together with from wholesale companions, made up 22% of complete income of $5.8 billion that yr, based on an annual submitting.

“As we proceed to scale [e-commerce], that enterprise turns into much more worthwhile,” Chief Govt Officer Chip Bergh mentioned in an interview. “Earlier than the pandemic, our e-commerce enterprise was a money-loser.”

Along with rising on-line, Levi can also be pushing customers to purchase extra than simply the corporate’s iconic denim bottoms. It is aiming to just about double income from tops by 2027. Levi can also be projecting its girls’s enterprise, which accounts for about one-third of gross sales at the moment, will double by then.

Based on Singh, Levi’s girls’s enterprise has increased gross margins than the corporate’s total common gross margins.

Levi anticipates its Dockers and Past Yoga banners to contribute mixed income of almost $1 billion by 2027. Levi acquired Past Yoga, well-known for its girls’s leggings and stretchy tops, for an undisclosed amount last year.

Shares of Levi are down about 28% this yr.

This story is creating. Please examine again for updates.