Bull of the Day: Levi Strauss & Co. (LEVI)
Founded in 1873 in San Francisco, Levi Strauss & Co. (LEVI) is a retail company known around the world for its iconic Levi’s denim brand; Dockers, Denizen, and Signature by Levi Strauss & Co. are also under the company’s umbrella. LEVI first went public back in 1971, but had been a private company up until its market return last year.
Q1 Earnings Recap
Despite 15% of its global store base remaining closed sue to Covid-19, Levi’s still beat analyst and its own management targets.
Sales fell 13%, which was less than expected, and the company saw improved profitability thanks to successful pricing and promotions trends. Additionally, operation income only declined 1% year-over-year as Levi’s cut its selling expenses.
Most notably, however, was the retailer’s record gross profit margin of 58%, which was boosted by rising prices and the shift toward higher-priced denim.
Its e-commerce segment outperformed as well, growing to 26% of total revenue compared to 16% in the year-ago quarter.
LEVI Breaks Out
Shares have surged recently on hopes of a rebound on the horizon, up about 80% over the past six months. Estimates have been rising too, and LEVI is a Zacks Rank #1 (Strong Buy) right now.
For the current fiscal year, four analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up $0.14 to $1.11 per share. Earnings are expected to grow 428% compared to the prior year period, and 2022 should generate more profits as well.
Looking ahead, management expects sales growth between 24% and 25% for the first half of 2021 despite cautioning that the pandemic will continue to pressure its top line. The company also boosted its dividend to $0.06 per share, or a $24 million payout; share currently yield 0.55% on an annual basis.
Additionally, Levi’s launched an online secondhand store last year, reselling some of their classic vintage styles. This could be big for the company, especially as consumers are prioritizing environmental sustainability more and more.
If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep LEVI on your shortlist.
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