Earnings Update: Levi Strauss’ (LEVI) net revenue jumps 41% in Q3

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Earnings Update: Levi Strauss’ (LEVI) net revenue jumps 41% in Q3

 Earnings Update: Levi Strauss’ (LEVI) net revenue jumps 41% in Q3
Image source: sasirin pamai,Shutterstock

Highlights

  • Levi Strauss & Co’s (NYSE: LEVI) adjusted net income rose to US$197 million in Q3 2021, from US$31 million in Q3, 2020.

  • The company’s net revenue rose by 41% YoY to US$1.5 billion.

  • The adjusted diluted EPS rose from US$0.08 in Q3 2020 to US$0.48 in Q3 2021.

American multinational apparel company Levi Strauss & Co. (NYSE: LEVI) reported strong revenue growth in the third quarter of fiscal 2021 after the closing bell on Wednesday.

The stock was up 2.81% to US$24.92in the after-market trading at 7:08 pm ET.

The company said that its business saw a “significant impact” in some geographies due to the Delta variant cases in the quarter ended August 29, 2021.

In addition, the company said that it paid back the remaining US$200 million of its 2025 notes, bringing the gross debt to the pre-pandemic levels.

Elated at the quarterly results, CEO Chip Bergh said that the strong revenue growth reflects the Levi brand’s strength and the agility of its supply chain network.

Despite a complex macro-economic environment due to covid, the strong momentum in the company’s direct-to-consumer business has lifted the results, he said.

Bergh added that the purchase of the Beyond Yoga brand would strengthen its position in the premium activewear market.

Levi Strauss’ Q3 earnings stats

The company’s net revenue rose by 41% YoY to US$1.5 billion.

In addition, net revenue from direct-to-consumer business went up by 34% YoY. Likewise, the net revenue from digital channels grew by 10% YoY in Q3 2021.

Furthermore, digital sales accounted for around 20% of its total revenue in the third quarter.

The company’s net income was US$193 million. The adjusted net income rose from US$31 million in Q3 2020 to US$197 million in Q3 2021.

Its adjusted gross margin was up by 390 basis points or 57.5% YoY. At the same time, its operating margin was up 14.4% YoY.

The adjusted diluted EPS rose from US$0.08 in Q3 2020 to US$0.48 in Q3 2021. Also, its adjusted free cash flow for the first nine months of 2021 was US$251 million.

Also Read: Constellation (STZ), Acuity (AYI) post strong quarterly sales growth

Levi Strauss’ (LEVI) net revenue jumps 41% in Q3, 2021.

Source: Pixabay

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Recent developments

The company has recently completed the purchase of Beyond Yoga for around US$400 million. The company said the acquisition is part of the plans to diversify itself into the activewear segment.

In addition, the Board of Directors has approved a US$200 million share buyback program.

The strong Q3 performance will enable the company to allocate capital in the core priority areas,  and help repay some of the debt, chief financial officer Harmit Singh said.

The company said that 10% of its retail stores internationally, mainly in Asia, were temporarily closed due to the resurgence of the Covid-19 virus and the ensuing lockdowns in August.

Bottomline

Overall, the retail sector has made a significant comeback despite the Delta virus threat in the last two quarters. Consumer spending also saw a major jump, helping the industry to rebound. However, investors should evaluate the companies carefully before investing in stocks.

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