People returning to work and social gatherings wore the comfy styles that had reigned during lockdowns, thus Levi Strauss & Co’s denim jeans and jackets flew off the shelves in the second quarter.
This, combined with higher prices, enabled Levi’s to outperform expectations and raise its quarterly dividend, sending its shares up roughly 4% in extended trading.
Levi’s, like its competitors, raised prices to offset rising raw material and labour costs, but the firm has yet to see a significant impact on demand, as its loose-fitting clothing, such as baggy jeans, remains popular.
“At the moment, a consumer is likely to decide to put their dollars towards (Levi’s product),” Jane Hali and Associates senior analyst Jessica Ramírez said, adding that there is a denim boom.
Nonetheless, revenue from Levi’s value brands, notably Signature, fell by the mid-single digits in the quarter, indicating that lower-income consumers are beginning to feel the squeeze of rising inflation, according to Chief Executive Officer Charles Bergh.
These brands account for a modest portion of Levi’s total revenue.
According to Refinitiv IBES statistics, the Dockers and Denizen owner’s overall revenue increased 15 per cent to $1.47 billion in the quarter ended May 29, exceeding analysts’ expectations of $1.43 billion.
Levi’s also confirmed its revenue and profit projections for 2022 and increased its quarterly dividend by 20 percent to 12 cents per share.
However, net income fell by 23 per cent as a result of $60 million in expenses connected to the suspension of activities in Russia.
Excluding items, the 169-year-old company earned 29 cents per share, exceeding analyst expectations of 23 cents.
(Adapted from FashionNetwork.com)