Two days ago shares of Levi Strauss & Co jumped more than 9% after the American clothing company reported online sales growth of 52%. This factor helped offset losses elsewhere in the business during the fiscal third quarter.
The company’s management expects strong performance will continue into the holiday quarter. However, management expects sales to fall by 14% to 15% year over year during the period, assuming the pandemic does not worsen.
Importantly, in the fourth quarter, the company will stop paying a dividend. However, it aims to resume payouts in 2021, should the positive trends continue. It is worth noting that, the company’s third-quarter sales fell 27% due to the coronavirus-related store closures. Unfortunately, net income declined 78%.
According to CEO Chip Bergh, recent investments in the direct-to-consumer business helped to achieve better-than-expected performance. Moreover, the famous company also gained market share in the key women’s apparel category.
Levi Strauss & Co and main findings
The company made tough decisions. For example, in July Levi Strauss & Co announced that it decided to reduce about 15% of its global corporate workforce. However, thanks to tough decisions the company was able to deal with challenges.
The fiscal third quarter ended on August 23. Let’s have a look at the results. For instance, earnings per share failed to meet expectations. However, revenue surpassed expectations, as the company revenue in the quarter reached $1.06 billion.
Importantly, the net income of Levi Strauss & Co fell to $27 million or 7 cents per share, from $124 million or 30 cents a share in 2019.
Interestingly, excluding one-time charges, Levi’s earned 8 cents per share. Let’s continue with net revenue. In the fiscal third quarter, net revenue dropped $1.06 billion from $1.45 billion in 2019. However, even this result surpassed expectations.
As stated above, online sales increased in the quarter. Notably, its digital revenue globally, which includes sales on its own websites and wholesale partners grew 50% year over year.
According to the company, it expects uncertainty created by the coronavirus to affect its business for at least the rest of 2020.
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