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Levi Strauss Falls, Profit Declines as Company Spends to Grow
Levi slightly raised its fiscal 2019 guidance for net revenue growth to the high end of the mid-single digit range.
10 Jul 2019, 09:33 AM IST 
Shoppers carry Levi Strauss & Co. shopping bags at the Fashion Outlets of Chicago mall in Chicago, Illinois. (Photographer: Daniel Acker/Bloomberg)
(Bloomberg) -- Levi Strauss & Co. fell in late trading as profit in its second quarter as a public company tumbled from a year earlier.
- The denim maker said on its conference call that adjusted diluted earnings slipped 21% from the prior year to 17 cents. When including $29 million of expenses associated with its IPO, second-quarter profit was 7 cents a share. “I’m not going to worry about the one-time cost of the IPO,” Chief Executive Officer Chip Bergh said in an interview after the earnings release. “That’s a one-time short-term hit. We’re in it for the long-term.”
Key Insights
- Levi has been working to bolster its retail network and e-commerce sales, and said its direct-to-consumer business increased 9% last quarter, mostly due to those efforts. But that growth comes at a cost, with higher investment spending. Advertising costs were also higher.
- While revenue topped projections, it wasn’t enough for investors, who sent the shares down as much as 7.6%. Levi has been pushing harder in international markets and sales last quarter increased in Europe and Asia as well as in the Americas.
- Levi slightly raised its fiscal 2019 guidance for net revenue growth to the high end of the mid-single digit range. It also said constant-currency adjusted EBIT margins will be in the range of 10 basis points, up from a previous forecast of flat-to-slightly up. Still, mid-single digit growth this year would suggest a slowing ahead after 10% constant-currency revenue growth in the first half. The company says that has to do with where Black Friday falls this year.
Market Reaction
- Levi shares fell as low as $21.87 in late trading. The stock has advanced 39% since the IPO through Tuesday’s close.
Get More
- For financial details, click here.
- For company statement, click here.
To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson
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