Q1 2022
- Demin jean maker Levi Strauss & Co. announced results for the first quarter of fiscal 2022 which beat Wall Street forecasts on the top and bottom line.
- The company managed to pass price increases onto customers and increased sales volumes of t-shirts and jeans in the period.
- Revenue was up 22% y/y to $1.59 billion (26% on a constant currency basis), topping estimates of $1.55 billion. Levi’s took a knock from the temporary suspension of its Russian operations, which comprise around 2% of total sales. It also took a $60 million hit to total sales as a result of supply chain constraints. Sales jumped 26% y/y in the Americas, 13% y/y in Europe, and grew 11% y/y in Asia.
- The direct to customer (DTC) strategy (which Nike has also leaned-into in recent years) saw Levi’s DTC net revenues increase 35%, driven by both company-operated stores and e-commerce. As a percentage of first quarter company net revenues, sales from DTC stores and e-commerce comprised 30% and 9%, respectively, for a total of 39%. Wholesale net revenues increased 15% reflecting strong demand for the Levi’s brand globally.
- Gross profit increased 24% y/y to $944 million, with the gross margin improving to 59.3% from 58.2%. Net income was up 37% y/y to $196 million, or 48 cents per share. Cash and cash equivalents totaled $678 million at the end of the first quarter, with net debt of $248 million. Free Cash Flow (FCF) was negative at the end of the period due to share buybacks, increased capex and higher dividends.
- Levi’s reaffirmed its guidance for fiscal 2022 as it has not yet seen consumers trading down for less expensive apparel. It expects revenue growth of 11% to 13% y/y, to between $6.4 billion and $6.5 billion. And Adjusted diluted EPS of $1.50-to-$1.56.