Levi Boosts Outlook as Direct-to-Consumer Strategy Pays Off

Levi Strauss & Co. raised its projections for the year after reporting better-than-expected quarterly results, citing strong demand in all regions as the denim brand steers shoppers to its own stores and website.

The San Francisco-based retailer reported revenue of $1.7 billion in the fiscal quarter ended March 1, exceeding the average of analyst estimates. Earnings per share, excluding some items, also surpassed expectations.

“Our consumer continues to be resilient,” Chief Executive Officer Michelle Gass said in an interview.

Gass has focused on expanding Levi’s offerings to include more tops and new styles of jeans while prioritizing the brand’s stores and websites. Those channels now represent more than half of Levi’s sales. The efforts seem to be paying off despite a broader pullback in US retail sales. Separately, Levi said company veteran Harmit Singh — Levi’s chief financial and growth officer — is stepping down, marking a major change for the brand. Singh, 63, has served as CFO for more than a decade, and helped to steer the company’s return to public markets in 2019. He will remain in his role until a new executive is named. The company is currently searching for his replacement.

Levi raised its outlook for both organic and net revenue for the current fiscal year. It also increased its guidance for adjusted earnings per share. While many consumer companies are struggling in China, Levi’s results in the country were “positive” this quarter, Singh said in an interview, rebounding from earlier softness.  “Levi’s is doing a great job managing investor expectations,” said Mary Ross Gilbert, a senior analyst with Bloomberg Intelligence. “We anticipated a beat and raise. Women’s is driving growth.”

Like Calvin Klein, Levi has benefited from shoppers’ renewed interest in ‘90s styles, fueled by the success of the series Love Story: John F. Kennedy Jr. & Carolyn Bessette. Levi’s 517 fit jeans, which were a favorite of Bessette Kennedy, jumped 25% in the quarter, Gass added.

Mary Ross Gilbert, Bloomberg Intelligence Senior Equity Analyst, covering retail, joins Paul Sweeney and Scarlet Fu on “Bloomberg Intelligence” to discuss Levi’s positive earnings and where the company can continue to grow.

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