Levi Strauss noticed internet revenues for the second quarter bounce 156 % to $1.28 billion, turning a revenue in comparison with a loss in 2020.
In a Nutshell: Levi Strauss & Co. reported monetary outcomes for the second quarter that the corporate mentioned exceeded its expectations on income, adjusted gross margin and adjusted earnings earlier than curiosity and taxes (EBIT).
“Revenues in most markets are recovering faster than anticipated, and we are emerging from the pandemic with sustainable and improved structural economics,” Harmit Singh, chief monetary officer of Levi Strauss & Co., mentioned. “As we look forward, we’re raising our expectations for revenues and profits. Our balance sheet remains strong and we continue to return cash to shareholders, with dividends now back to pre-pandemic levels.”
The firm’s expectations for the second half of fiscal 2021 are actually greater than 2019. Reported internet revenues development of 28 % to 29 % is predicted in comparison with the second half of fiscal 2020, which represents reported internet revenues development of 4 % to five % in comparison with the second half of fiscal 2019. Adjusted diluted EPS of 72 cents to 76 cents is forecast, bringing the full-year adjusted diluted EPS outlook to $1.29 to $1.33.
During the quarter, the Levi’s skilled momentary door closures in geographies affected by lockdowns related to Covid-19 circumstances–roughly one-third of the complete retailer footprint in Europe and 17 % of doorways globally had been closed in the course of the quarter. Currently, 92 % of doorways are open.
Direct-to-consumer (DTC) internet revenues elevated 141 % within the interval because of elevated revenues from company-operated shops. E-commerce momentum continued regardless of retailer re-openings with development of 42 % reflecting the good thing about accelerating omnichannel initiatives. DTC shops and e-commerce comprised 29 % and eight %, respectively, of complete firm internet revenues within the second quarter.
The firm’s international digital internet revenues, which embrace internet revenues attributable to owned e-commerce websites in addition to the web companies of its pure-play and conventional wholesale clients, grew roughly 75 % in comparison with the identical interval within the prior yr, and comprised roughly 23 % of second quarter fiscal 2021 internet revenues.
In the Americas, internet revenues and working earnings elevated, reflecting the affect of the pandemic on prior-year outcomes. Notably, firm e-commerce internet revenues grew 18 % whereas lapping sturdy development within the prior yr.
In Europe, internet revenues and working earnings elevated, reflecting the affect of the pandemic on prior yr outcomes, and firm e-commerce internet revenues grew 75 %. In Asia, internet revenues and working earnings elevated, reflecting the affect of the pandemic on prior yr outcomes, whereas firm e-commerce internet revenues grew 75 %.
Sales: Net revenues for the second quarter ended May 30 elevated 156 % yr over yr to $1.28 billion. Wholesale internet revenues elevated 167 %, reflecting sturdy demand above the second quarter of fiscal 2020.
Compared to the second quarter of fiscal 2019, complete firm internet revenues decreased 3 %. The similar comparability noticed Americas internet revenues develop 3 %, pushed by development within the U.S. market. The area’s wholesale internet revenues grew 4 % on sturdy efficiency by the Levi’s model and Signature. Net revenues by way of all digital channels grew 61 % and represented 19 % of the area’s gross sales within the quarter.
Europe internet revenues declined 8 % from the 2019 interval, with DTC down 21 %, reflecting momentary retailer capability restrictions and closures throughout one-third of the quarter. The area’s gross sales decline was partially offset by 4 % income development in wholesale and over one hundred pc development by way of all digital channels.
Compared to the second quarter of fiscal 2019, Asia internet revenues declined 12 %, because the COVID-19 pandemic continued to negatively affect a number of of the area’s massive markets, together with India, which accounted for roughly half the Asia area’s gross sales decline.
China marked an inflection to development for the primary time for the reason that starting of the pandemic. The Asia area’s gross sales decline was partially offset by income development by way of all digital channels of 83 %.
Earnings: Net earnings within the quarter was $65 million in comparison with a internet lack of $364 million in the identical quarter of the prior yr. Adjusted internet earnings of $93 million in comparison with an adjusted internet lack of $192 million in the identical quarter of the prior yr was because of greater internet revenues and adjusted gross margin partially offset with greater adjusted gross sales, normal and administrative (SG&A) prices.
Adjusted diluted earnings per share elevated to 23 cents in comparison with a lack of 48 cents for a similar prior-year interval.
Gross revenue within the quarter was $750 million, in comparison with $170 million within the prior-year interval. Gross margin was 58.8 % of internet revenues, up from 34.1 % in a yr earlierr, primarily reflecting $87 million in prices taken within the second quarter of fiscal 2020 associated to COVID-19.
CEO’s Take: Chip Bergh, president and CEO of Levi Strauss & Co., mentioned: “We generated strong momentum in the second quarter with the accelerated recovery of our revenues and delivered growth across all regions and channels. This was underscored by the strength of our brands and our ability to capitalize on evolving denim trends and a continued shift to casualization. As we move into the second half of 2021, we are focused on emerging stronger with our strategic priorities of leading with our enduring brand, accelerating our direct-to-consumer connections, and diversifying across categories, channels and geographies.”