On April 3, 2024, Levi Strauss & Co (LEVI, Financial) released its 8-K filing, disclosing its financial results for the first quarter of 2024. Despite a challenging market environment, the company reported mixed results, with net revenues of $1.6 billion, which is an 8% decrease on a reported and constant-currency basis compared to Q1 2023, yet slightly above analyst estimates of $1.447 billion. However, the company reported a net loss of $11 million, a significant downturn from the net income of $115 million in the same quarter last year and falling short of analyst net income estimates of $47.1506 million. The adjusted diluted earnings per share (EPS) stood at $0.26, surpassing the estimated earnings per share of $0.1112.
Levi Strauss & Co, a global leader in jeanswear, faced several challenges in the quarter, including a shift in wholesale shipments and the exit of the Denizen business. The company's strategic focus on direct-to-consumer (DTC) channels, however, yielded a 7% increase in net revenues, with e-commerce experiencing a robust 13% growth. This shift towards DTC channels, which now represent a record 48% of total net revenues, is a testament to the company's resilience and adaptability in a rapidly changing retail landscape.
The company's gross margin improved significantly, rising to 58.2% from 55.8% in the previous year, primarily due to lower product costs and a favorable mix shift. This increase in gross margin is particularly noteworthy as it reflects the company's ability to manage its cost structure effectively amidst market fluctuations.
Levi Strauss & Co's balance sheet remains solid, with cash and cash equivalents totaling $517 million and total liquidity at approximately $1.5 billion. Inventory levels decreased by 14%, showcasing efficient working capital management. The company also returned approximately $73 million to shareholders through dividends and share repurchases in the first quarter.
Michelle Gass, President and CEO, highlighted the company's strong start to the year, stating:
"We started the year strong delivering results above expectations, underscoring the power of the Levi’s brand and the progress we are making on our strategic priorities."
Chief Financial and Growth Officer Harmit Singh expressed confidence in the company's trajectory:
"Our global productivity initiative, Project Fuel, is progressing well and improving the profitability of the company. Looking forward, we are encouraged by trends in our business, around the world, including in Europe."
Despite a reported net loss, the company's adjusted figures and confidence in its restructuring initiative, Project Fuel, suggest a strategic realignment that may bolster future performance. Levi Strauss & Co reaffirms its FY revenue growth of 1-3% and raises its EPS range to $1.17-$1.27, reflecting optimism for a return to mid-single-digit growth in the second half of the year.
Investors and analysts will continue to monitor Levi Strauss & Co's progress as it navigates the dynamic apparel industry, balancing the need for cost control with strategic investments in growth channels.
Explore the complete 8-K earnings release (here) from Levi Strauss & Co for further details.
