By Granth Vanaik and Katherine Masters
(Reuters) -Levi Strauss raised its annual revenue forecast on Wednesday, citing the attire maker’s current value financial savings from job cuts and fewer aggressive reductions on its denims and denim clothes, sending its shares up about 8% in prolonged buying and selling.
In a bid to chop prices, Levi’s (NYSE:) has decreased its world company workforce, together with trimming the variety of senior management positions. It has additionally consolidated its operations in Europe and exited lower-margin companies, similar to its Denizen model and footwear enterprise.
Levi’s cost-cutting marketing campaign has helped its inventory get better about 13% this yr, not together with Wednesday’s late-day rally.
The attire retailer recorded a restructuring cost of $116 million within the first quarter.
Nevertheless, Chief Monetary Officer Harmit Singh stated the denims maker was “feeling good” a couple of extra “steady” U.S. client in an interview with Reuters on Wednesday.
Gross sales of Levi’s clothes on to shoppers on its web site and at its community of company-owned shops rose 8% on a constant-currency foundation, which follows a ten% enhance within the prior quarter.
CEO Michelle Gass stated “new product” was driving development in its direct-to-consumer enterprise, particularly in ladies’s types, which Levi’s plans to develop with new tops, corsets and denim skirts.
Its adjusted revenue was 26 cents per share within the first quarter ended Feb. 25, above expectations of 21 cents.
“The corporate’s earnings blowout and raised forecast exhibits the long-lasting model is hitting its stride with shoppers,” stated Michael Ashley Schulman, chief funding officer at Operating Level Capital Advisors.
But, Levi’s gross sales by way of its wholesale channels – which embrace shops similar to Macy’s (NYSE:) and different retailers similar to Walmart (NYSE:) – fell by 19% on a constant-currency foundation, a steeper decline than a 3% drop within the fourth quarter.
With consumers spending much less on clothes amid sticky inflation, many chains that carry Levi’s denims have decreased their orders to be able to preserve inventories lean.
Singh instructed Reuters that Levi’s intends to take related measures and reduce on about 15% of its product assortment to focus extra on top-selling objects.
“What’s actually resonating nowadays is the baggier match, the low, free assortment,” Singh stated.
Larger full-price gross sales and decrease product prices led Levi’s gross margins to rise by 240 foundation factors to 58.2% within the first quarter, from 55.8% a yr earlier.
However the San Francisco-based agency stated it continues to anticipate full-year income to develop within the vary of 1% to three%.
The denim maker stated it expects an adjusted revenue between $1.17 and $1.27 per share for 2024, up from its prior forecast of $1.15 to $1.25. Analysts had anticipated a revenue of $1.21 per share earlier than the steering replace.
Its web income fell about 7.8% to $1.56 billion within the first quarter, narrowly beating estimates of $1.55 billion, based on LSEG information.
