Levi Strauss stock price: Levi Strauss surges 20% as revenue forecast increases with direct-to-consumer sales and cost savings
As wholesale partners such as department store chains Macy’s and Kohl’s struggled to attract customers, the company turned to its own stores and website to drive sales.
DTC channels accounted for nearly half of total revenue in the first quarter ended February 25, up from 42% in the previous quarter.
Michelle Gass, the former CEO of Kohl’s who took office in January, has cut staff to cut costs against a backdrop of a stressed wholesale channel and unpredictable consumer demand.
“In the U.S., the jeans category has stabilized at similar levels to previous years after several years of volatility,” Gass said Wednesday.
The latest results drew a positive response from Wall Street, with some analysts calling it an “encouraging start” to the year. Wells Fargo analyst Ike Boruchow raised his price target to $20 from $17, saying, “We see a clear change in sentiment and business trajectory, and there are now growing signs of optimism after a difficult 12-24 months.” The company’s stock price rose 19.8% to $22.34, the second-largest gain on record.
Levi highlighted the growing popularity of loose fits, with sales of women’s loose-fitting styles launched this quarter soaring 50%.
“The positive inflection in the wholesale order book in the second half of the year gives us confidence that Europe will grow in the second half of the year,” Gass said on the earnings conference call.
“There is a risk that Europe will not improve as much as expected in the second half of the year,” said Citigroup analyst Paul Lehuez.
Levi’s forward price-to-earnings multiple, a common benchmark for stock valuation, is 14.23, compared with 11.48 and 17.97 for Under Armor and Gap Inc, respectively.
