Equities

Levi Strauss Surges 5.6% in After-Hours Trading on Strong Q1 Earnings

POSITIVE

Levi Strauss surpasses Q1 expectations with $1.6B revenue, raises 2024 earnings outlook, shares jump 5.6% in after-hours.

By Bill Bullington

4/3, 17:20 EDT
Levi Strauss & Co
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Key Takeaway

  • Levi Strauss & Co. (LEVI) exceeded Q1 expectations with revenue of $1.6 billion and adjusted earnings of 26 cents per share, beating the 21 cents forecast.
  • Announced Project Fuel aims to save $100 million by fiscal 2024, with restructuring charges already at $116 million.
  • Raised its fiscal 2024 earnings outlook to $1.17-$1.27 per share; shares surged 5.6% to $19.74 in after-hours trading.

Levi Strauss Beats Expectations

Levi Strauss & Co. (LEVI) has once again demonstrated its resilience and strategic foresight, surpassing analyst expectations for its fiscal first-quarter revenue and earnings. Despite a challenging year-over-year comparison, the iconic denim brand reported revenue of $1.6 billion, defying projections and showcasing its enduring appeal and operational excellence.

Earnings Outshine Forecasts

In a testament to its robust financial management and strategic initiatives, Levi Strauss reported adjusted earnings of 26 cents a share, eclipsing Wall Street's consensus expectations of 21 cents a share. This performance is particularly noteworthy as it includes the impact of a 33-cent-per-share charge related to restructuring expenses, underscoring the company's proactive steps towards efficiency and long-term profitability through its Project Fuel initiative.

Project Fuel Ignites Savings

Earlier this year, Levi Strauss announced Project Fuel, a comprehensive cost savings initiative expected to save the company $100 million in fiscal 2024. The initiative, which includes cutting corporate jobs, is a strategic move to streamline operations and enhance financial flexibility. In the first fiscal quarter alone, restructuring charges amounted to $116 million, primarily from severance and post-employment benefit charges, indicating the company's commitment to its strategic realignment.

Optimistic Outlook for Fiscal 2024

Reflecting confidence in its strategic direction and operational efficiencies, Levi Strauss has slightly raised its earnings outlook for fiscal 2024. The company now anticipates adjusted earnings per share to range between $1.17 and $1.27, an upward revision from its previous forecast. This adjustment aligns with the Street's expectations and underscores the company's positive trajectory amidst a dynamic retail landscape.

A New Era Under CEO Michelle Gass

The first quarter marked the beginning of a new chapter for Levi Strauss, with Michelle Gass at the helm as the new CEO. Gass has been charged with the pivotal task of evolving Levi’s from its traditional wholesale-focused model to a direct-to-consumer (DTC) strategy. Under her leadership, DTC net sales rose 7% year-over-year, signaling the effectiveness of this strategic pivot and the potential for sustained growth.

Shares Surge in After-Hours Trading

In response to the positive financial results and strategic initiatives, shares of Levi’s experienced a significant uptick, rising 5.6% to $19.74 in the after-hours trading session. This increase adds to the stock's impressive 13% gain this year, reflecting investor confidence in the company's direction and growth prospects.