Levi Strauss Jumps After Its First Report as Public Company

(Bloomberg) -- Levi Strauss & Co. jumped after its first quarterly report as a public company impressed investors.

• The apparel maker, which completed an initial public offering last month and then saw its stock surge, said revenue for the quarter ended Feb. 24 rose 7 percent to $1.4 billion. Analysts had yet to provide estimates, but Levi did say last month that sales for the quarter would gain 6 to 7 percent.

Key Insights

• Levi’s executives pitched the IPO to investors as a growth story, and the results back that narrative up. One of the main drivers is expected to be its push into categories beyond jeans, like tops and footwear. In its conference call, the company said tops grew 28 percent in the period.
• The other growth engine is expected to be Asia, and specifically China, where Levi has a relatively small business but sees big opportunity. Revenue from that region rose 8 percent to $253 million -- marking rapid growth for what’s still the company’s smallest region.
• Levi said it will open nearly 100 new company-operated stores this year. Chief Executive Officer Chip Bergh said the majority of the store openings will be in Europe and Asia, though both mainline and outlet stores will open in the U.S., too. “We’ve got a good model, it’s very profitable and we will continue to expand in those markets,” he said.
• The jeansmaker had been cutting costs to improve margins in the run up to going public. Last quarter, gross margin narrowed slightly from a year earlier to 54.6 percent, but it sees improvement ahead: Levi says its constant-currency adjusted EBIT margin will be flat-to-slightly up this year, better than the “roughly flat” it had estimated in February.

Market Reaction

• Levi shares rose as much as 6.5 percent to $23.30 in late trading Tuesday. The stock has gained 29 percent since its IPO last month through Tuesday’s close.

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• For financial details, click here.
• For company statement, click here.

To contact the reporters on this story: Matt Townsend in New York at mtownsend9@bloomberg.net;Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

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