Levi Strauss & Co reported better-than-expected sales for the third-quarter on Tuesday, with online revenue soaring 52 percent during the period.
Net revenue at the company fell 27 percent on a reported basis to 1.06 billion dollars, largely due to Covid-19-related store closures, while net income fell 78 percent to 27 million dollars. But those were ahead of the company’s expectations - analysts expected net revenue of around 822.2 million dollars.
It sent shares of the company up 10 percent in after-hours trading on Tuesday.
That decline in revenue was partially offset by strong e-commerce revenue which grew 52 percent over the period. The company’s global digital revenue, which includes its e-commerce sites and the online business of its pure-play and traditional wholesale customers, grew around 50 percent - it comprised approximately 24 percent of third-quarter revenue, double what it was a year prior.
Gross margin increased 130 basis points on a reported basis to 54.3 percent, while adjusted gross margin increased 60 basis points to 53.6 percent.
The company said it now expects sales to be down between 14-15 percent in the fourth quarter.
Growth in e-commerce and womenswear
CEO Chip Bergh was upbeat on the results and hailed the company’s focus on digitization, its womenswear category and fast-growing direct-to-consumer business. “These investments are already paying off,” he said. “We exceeded our expectations for the third quarter, our total digital business has doubled as a share of total net revenues, and Levi’s remains the global leader in denim, where our women’s business continues to take market share. And the brand has gotten even stronger during the pandemic."
Harmit Singh, executive vice president and chief financial officer, said: “We bounced back this quarter, delivering profitability and generating strong cash flows. The strength of the Levi’s brand is demonstrated in our gross margins, and revenues have been recovering from Covid-19 related disruptions faster than expected, driven by e-commerce, international and our women’s business, particularly within Europe and in the United States.
“Inventory is healthy headed into holiday, we are making investments in our digital transformation, and our cost and working capital actions have put us on a clear and accelerated path to achieving our adjusted EBIT margin ‘North Star’ of at least 12 percent when revenues recover to pre-Covid levels.”
Photo credit: Levi Strauss & Co, Facebook