Levi Strauss Whips Up a Solid Q3

Levi Strauss & Co. (NYSE: LEVI | LEVI Price Prediction) released fiscal third-quarter financial results after markets closed Tuesday. The company said that it had $0.31 in earnings per share (EPS) and $1.45 billion in revenue, compared with consensus estimates that called for $0.27 in EPS and $1.44 billion in revenue. The same period from last year had $0.34 in EPS and $1.39 billion in revenue.

During the latest quarter, revenues grew 4%, and 5% on a constant-currency basis, excluding $19 million in unfavorable currency effects. The company’s direct-to-consumer business grew by 12% on a constant-currency basis in the third quarter, primarily due to expansion and performance of the retail network and e-commerce growth. Net revenues from the company’s wholesale business grew 1% on a reported basis and 2% on a constant-currency basis, reflecting growth in Europe and Asia.

In terms of the segment breakdown, Levi reported:

• Americas net revenues decreased 3% year over year to $771 million.
• Europe net revenues increased 14% to $463 million.
• Asia net revenues increased 9% to $213 million.

The company affirmed its annual guidance. Levi expects to see constant-currency net revenue growth in the range of 5.5% to 6.5%. Consensus estimates are calling for $1.06 in EPS and $5.8 billion in revenue for the 2019 fiscal full year.

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Chip Bergh, president and CEO, commented:

We delivered strong third-quarter results and remain on-track to achieve our full-year expectations. Our strategies to diversify to faster-growing, high-opportunity, high gross margin businesses continue to drive momentum, as we again grew revenues double-digits internationally, in our direct-to-consumer business, and in the women’s and tops categories. And our global wholesale business grew two percent in constant-currency, despite U.S. wholesale facing what we expect will be the toughest comparison of the year. As for the fourth quarter, we again expect strong performance in international, direct-to-consumer, women’s and tops, and improved comparisons for U.S. wholesale. We’ll stay focused on what we can control as we grow this business over the long-term.

Shares of Levi Strauss closed Tuesday at $19.00, in a post-IPO range of $16.00 to $24.50. The consensus price target is $22.86. Following the announcement, the stock was up 2% at $19.37 in the after-hours session.
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