Levi Strauss stock soars 20% on higher profit forecast
Shares of apparel maker Levi Strauss & Co soared 20 per cent to a more than two-year high on Thursday as the company raised its annual profit forecast.
The Levi Strauss stock was up 19.8 per cent at $22.34, on pace to post its second biggest percentage gain on record.
The jeans maker has turned its focus on direct-to-customer (DTC) sales through own stores and its website.
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The move comes as Levi Strauss’ wholesale partners such as Macy’s and Kohl’s were struggling to attract customers.
According to Levi Strauss’ latest earnings, the DTC channel accounted for nearly half of the total revenue in the first quarter ended February 25, up from 42 per cent in the prior quarter.
On Wednesday, Levi Strauss raised its annual profit forecast, citing recent cost saving measures and plans to boost sales.
The firm said that it continues to expect full-year revenue growth in the range of 1 per cent to 3 per cent.
The San Francisco-based retailer recorded a restructuring charge of $116 million in the first quarter.
It reported a loss of $10.6 million, or 3 cents per share, in the first quarter, compared with a profit of $114.7 million, or 29 cents, a year ago.
Its DTC sales rose 8 per cent on a constant-currency basis, which follows a 10 per cent rise in the prior quarter.
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However, its sales through wholesale partners dropped by 19 per cent.
“The jeans category has stabilized in the U.S., now flat to prior year, after several years of volatility,” said CEO Michelle Gass, who cut jobs to rein in costs.
He also said, “positive inflection in our wholesale order book in the second half gives us confidence that Europe will grow in H2.”
On Wall Street, the Dow Jones Industrial Average was up 144.79 points, or 0.37 per cent, at 39,271.93 at 11:27 am, the S&P 500 was up 32.63 points, or 0.63 per cent, at 5,244.12, and the Nasdaq Composite was up 128.80 points, or 0.79 per cent, at 16,406.26.
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Published: 04 Apr 2024, 08:56 PM IST