Yahoo Finance Levi Strauss' (LEVI) Q2 Earnings Beat Mark, Revenues Rise Y/Y
Levi Strauss & Co. LEVI reported second-quarter fiscal 2024 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same. LEVI’s adjusted earnings of 16 cents a share outpaced the consensus estimate of 11 cents. The quarterly earnings increased from 4 cents per share earned in the year-ago fiscal quarter.
Shares of this San Francisco, CA-based player have gained 16.3% in the past three months compared with the industry’s 1.2% drop.
Q2 Metrics
Net revenues of $1,441.2 million came below the Zacks Consensus Estimate of $1,451 million. However, the metric rose 8% year over year on a reported basis and 9% on a constant-currency basis.
This Zacks Rank #2 (Buy) company’s direct-to-consumer (DTC) net revenues jumped 8% year over year and 11% on a constant-currency basis. E-commerce revenues rose 19% both on a reported basis and a constant-currency basis, including double-digit growth at the Levi’s and Beyond Yoga brands. DTC business accounted for 47% of the overall net revenues.
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Wholesale revenues rose 7% on a reported basis and 8% on a constant-currency basis. Other Brands’ revenues climbed 10% on both reported basis and a constant-currency basis. Dockers revenues rose 8.6% on a reported basis and 9.1% on a constant-currency basis. Beyond Yoga revenues grew 13% on a reported and constant currency basis.
In the Americas, revenues jumped 17% on a reported basis and 16% on a constant-currency basis. In Europe, revenues dipped 2% on both reported basis and a constant-currency basis. In Asia, revenues were in line on a reported basis and rose 6% on a constant-currency basis, buoyed by growth across the majority of the markets.
Margins & Costs
The gross margin of 60.5% expanded 180 basis points (bps) year over year, thanks to lower product costs and a positive mix shift, partly offset by the impacts of currency exchange.
Adjusted SG&A was $785 million, up from $753 million recorded in the year-earlier quarter. Adjusted EBIT was $87 million, up from $31.5 million in the year-ago fiscal quarter.
Other Financials
Levi Strauss ended the quarter with cash and cash equivalents of $641 million and total liquidity of $1.4 billion.
As of May 26, 2024, long-term debt and total shareholders’ equity were $1 billion and $2 billion, respectively. During the first six months of fiscal 2024, cash from operations was $548.8 million and adjusted free cash flow was $437 million.
The company returned nearly $65 million to shareholders in the fiscal second quarter, a 36% increase from the prior year. Management declared a dividend of 13 cents per share, totaling $52 million, payable in cash on Aug 20, 2024, to the holders of record as of Aug 2, 2024.
At the end of the quarter, the company had $639 million remaining under its existing share repurchase authorization with no expiration date.
Other Updates
As part of the company’s global productivity initiative, Project Fuel, it will transition from an owned-and-operated distribution and logistics network in the United States and Europe to a more balance between owned and third-party logistics providers. For the near term, such changes require the parallel operation of new and old facilities for the balance of 2024, resulting in a transitory rise in distribution costs. This strategic shift aligns with the goal of a seamless omnichannel experience, offering best-in-class service to customers.
Fiscal 2024 View
Management reaffirms reported net revenues guidance to be up in the band of 1-3% year over year. The company envisions adjusted earnings per share in the range of $1.17-$1.27, inclusive of a 5-cent adverse impact owing to the new distribution and logistics strategy, higher marketing spend in H2 and incremental currency headwinds.
Other Key Picks
We have highlighted three other top-ranked stocks, namely Abercrombie ANF, DICK'S Sporting DKS and Tractor Supply TSCO.
Abercrombie, a leading apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). ANF delivered an average earnings surprise of 210.3% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales implies growth of 10.4% from the year-ago reported figure.
DICK'S Sporting, a sporting goods retailer, currently carries a Zacks Rank of 2. DKS delivered an average earnings surprise of 4.7% in the trailing four quarters.
The consensus estimate for DICK'S Sporting’s current financial-year sales indicates growth of 1.8% from the year-ago reported figure.
Tractor Supply, the largest retail farm and ranch store chain in the United States, currently carries a Zacks Rank of 2. TSCO delivered an average earnings surprise of 2.7% in the trailing four quarters.
The Zacks Consensus Estimate for Tractor Supply’s current financial-year sales indicates growth of 3% from the year-ago reported figure.
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Levi Strauss & Co. (LEVI) : Free Stock Analysis Report
