Denim clothing manufacturer Levi Strauss& Co (NYSE: LEVI) published financial results for the second quarter of 2021:
- revenue increased by 156%, to $1.3 billion;
- wholesale sales increased by 167%, retail — by 141%;
- online sales grew by 75% and accounted for 23% of total revenue;
- operating and net profit rose to 106 and 65 million - against a loss of 448 and 364 million a year earlier.
Sales increased relative to 2020 ...
Levi Strauss revenue increased by more than 100% in each of the regions. The company's total sales grew 2.5 times largely due to the low base effect.: a year ago, during the quarantine, some stores had to be closed. The company notes, that a third of stores in Europe and 17% of stores worldwide remained closed during the last quarter. Now, according to the company, 92% of retail outlets are open.
"We significantly exceeded our revenue expectations., adjusted gross margin and adjusted EBIT. Sales in most markets recover faster, than expected, and we are emerging from the pandemic with a sustainable and improved economy.", said the company's CFO Harmit Singh.
... But remained below the level 2019 of the year
In comparison with 2019, the total revenue of Levi Strauss fell by 3%, and in the Americas, it grew by 3%. Wholesale sales in the region added 4%, and online — 61%.
Sales in Europe relative to 2019 fell by 8% largely due to closed stores. Wholesale sales increased by 4%, online sales – more than 100%.
Revenue in Asia compared to 2019 fell by 12%. First of all, due to the recession in the large market of India, where a large number of COVID-19 diseases are recorded. Online sales in the region added 83%.
Daddy's jeans
According to the management of Levi Strauss, in the second half of the 2021 fiscal year, the company's sales will grow by 28-29% compared to 2020 and by 4-5% compared to 2019. The company clarifies, that the forecast will remain relevant only if, if a new quarantine is not announced.
Levi Strauss CEO Chip Berg thinks, that new trends will help the company increase revenue, as tight pants are gradually going out of fashion. According to Berg, young and adult buyers began to choose wider jeans, like once in the nineties: "Cycles come and go. I think, that the pandemic has played a role in, that consumers are looking for more comfortable jeans ".
"Somebody think, that this is a new cycle in the denim industry, and we think, that it may very well be true. The latest real denim trend is skinny pants. And this trend lasted about ten years.", — added CEO Levi Strauss.
In the last year, Levi Strauss shares are growing much faster than the broad market index S&P 500: 125 against 37%. Since the beginning of the year, the company's securities have grown by 42%.
Levi Strauss sales in the second quarter, million dollars
| 2020 | 2021 | The change | |
|---|---|---|---|
| America | 283 | 715 | 153% |
| Europe | 129 | 365 | 183% |
| Asia | 86 | 196 | 128% |
