Consumer Products

How Levi Strauss Managed a Big Q3 Win Despite COVID-19 Headwinds

When Levi Strauss & Co. (NYSE: LEVI) reported its fiscal third-quarter financial results after the markets closed on Thursday, the clothing company said that it had $0.08 in earnings per share (EPS) and $1.1 billion in revenue. Consensus estimates had called for a net loss of $0.22 per share and revenue of $822.2 million. In the same period of last year, Levi said it had EPS of $0.31 and $1.4 billion in revenue.

During the most recent quarter, net revenues fell 27%, primarily due to impacts of the COVID-19 pandemic, including reduced traffic and ongoing closures of company-operated and third-party retail locations for portions of the quarter and in certain markets.

Wholesale revenues declined 29% year over year and direct-to-consumer revenues declined 22%.

E-commerce revenue saw growth of 52%, partially offsetting the overall decline. At the same time, the company’s global digital revenues, which includes the company’s e-commerce sites, as well as the online business of its pure-play and traditional wholesale customers, grew about 50% year over year and comprised 24% of third-quarter 2020 revenues, double what it was last year.

Management noted that although trends appear to be improving sequentially, and at a faster pace than previously expected, the ultimate impact of the COVID-19 pandemic remains highly uncertain. The company expects that its business and results of operations, including net revenues, earnings and cash flows, will continue to be significantly adversely affected for at least the balance of 2020.

In terms of its regional segments, Levi reported:

  • Americas net revenues decreased 29% year over year to $550 million.
  • Europe net revenues decreased by 16% to $390 million.
  • Asia net revenues decreased by 42% to $123 million.

Total available liquidity was $2 billion, with cash at the end of the quarter totaling $1.4 billion.

Levi Strauss stock traded up 9.8% early Wednesday to $16.18, in a 52-week range of $9.09 to $20.70. The consensus price target is $16.89.