Levi jumps as cost cuts drive higher-than-expected profit

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Levi jumps as cost cuts drive higher: After reporting better-than-expected sales and profitability in the first quarter, Levi Strauss & Co. saw a considerable jump, leading to a more optimistic view for the entire year.

The company’s efforts to reduce costs and increase productivity, which were announced in January, are clearly paying off. Gains in market share were also noted by Levi Strauss. The adjusted EPS came in at 26 cents, which was more than the 21 cents average projection from analysts. In addition, during the quarter ended February 25, the gross margin—a critical indicator of profitability—surpassed projections.

At 4:18 p.m., New York time, following the announcement, the company’s shares rose 6.3% in late trade. Considering the stock’s 13% year-to-date climb, which surpassed the Dow Jones Industrial Average’s growth by more than threefold as of Wednesday’s close, this was a significant increase.

Even though Levi’s wholesale business had certain difficulties, the company nonetheless managed to achieve more revenue than expected, with a smaller decline than expected. Levi’s is putting a lot of effort into its DTC operations, which include its own stores and website. During the quarter, direct-to-consumer sales increased by 7% while revenue from third-party retail partners fell by 18%.

While CEO Michelle Gass did highlight the importance of direct-to-consumer development, she also stressed the continued value of wholesale to Levi’s overall business plan. Gass highlighted the importance of wholesale in expanding Levi’s reach and voiced optimism about expected improvements in performance later in the year.

Since taking over as CEO in January, Gass has led Levi Strauss to focus on releasing new fashions like denim skirts and dresses, loose-fitting jeans, and non-denim athletic pants. Wholesale expansion is being bolstered by these innovative items, which have increased demand from consumers.

By adding 2 cents to the previous prediction, Levi Strauss raised its full-year profit forecast. Earnings per share for the period are now expected to be between $1.17 and $1.27, according to the business. Harmit Singh, chief financial officer, said that the company’s better spending controls were to blame for the better guidance.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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