Levi Strauss profits top estimates as customers purchase at higher costs
Key takeaways:
- Denim retailer Levi Strauss said fiscal first-quarter profits and earnings beat critics’ estimates.
- The firm sold more jeans and T-shirts at higher price points, often straight to clients.
- Levi reaffirmed its prediction for fiscal 2022, considering no significant worsening of inflationary pressures or shutdowns of international economies.
- Levi CEO Chip Bergh informed CNBC that customers have yet to trade down for less pricey apparel.
On Tuesday, denim dealer Levi Strauss & Co. reported fiscal first-quarter profits and earnings that outperformed analysts’ estimates. It sold more of its pants and T-shirts at higher cost points, often straight to customers.
Levi also reaffirmed its prediction for fiscal 2022, considering no significant worsening of inflationary pressures or shutdowns of global economies. It felt any impact from its recent decision to temporarily suspend business in Russia, representing approximately 2% of its total sales.
The retailer has yet to see clients trade down for less costly apparel, even as gasoline costs to grocery bills flood, Levi CEO Chip Bergh told CNBC in a phone interview. And still, as the firm has increased prices on several items to compensate for other expenditures within the business, customer demand has stayed strong.
To be specific, Bergh said Levi is maintaining a close eye on customer demand, knowing that points of a coming recession have been increasing among economists. “We don’t have our head in the sand,” the CEO stated. “If we see [demand] beginning to get shaky, we will take the proper action.”
Levi shares grew about 1.5% in extended trading after closing the day down 1.5%.
Here’s how Levi did for the three months ended Feb. 27 likened to what Wall Street was expecting, based on a survey of critics by Refinitiv:
- Profits per share: 46 cents adjusted vs. 42 cents predicted
- Revenue: $1.59 billion vs. $1.55 billion predicted