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Levi Strauss hikes dividend as Q2 earnings exceed expectations

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An indication is posted in front of the Levi Strauss & Co. headquarters on April 09, 2021 in San Francisco, California.

Justin Sullivan | Getty Images News | Getty Images

Levi Strauss on Thursday reported quarterly revenue and earnings that got here in above Wall Street expectations, because the clothing company known for its denim said it benefitted from Americans choosing more relaxed dress codes.

The San Francisco company increased its quarterly dividend and stood by its guidance for the yr. Its shares were up about 4% at $17.08 in after-hours trading.

Here’s how Levi performed for the quarter ending May 29 in comparison with Wall Street estimates based on a survey of analysists by Refinitiv.

  • Revenue: $1.47 billion vs. $1.43 billion expected
  • Earnings per share: 29 cents adjusted vs. 23 cents expected

Levi Straus said its higher revenue within the quarter was fueled by each stronger direct-to-consumer and wholesale sales. It said digital revenue rose 3% globally and accounted for 20% of sales within the quarter.

“Jeans are actually rather more acceptable within the office,” CEO Chip Bergh told CNBC in an interview.

The retailer did track mid-single-digit declines from a yr ago at its two value denim brands, which sell at Goal, Walmart and Amazon and make up a small percentage of the corporate’s overall business, Bergh said.

“So there’s some evidence that the more value conscious consumer — the lower income consumer — is beginning to feel the squeeze and is beginning to make some decisions,” he said.

But he said the declines were greater than offset by the corporate’s core business.

Levi’s revenue of $1.47 billion for the quarter was up 15% from the $1.27 billion the corporate reported within the year-ago period. Analysts expected $1.43 billion.

Sales grew by 17% within the Americas, 3% in Europe and 16% in Asia in comparison with 2021. Levi’s other brands, Dockers and Beyond Yoga, saw a rise of 56% in comparison with last yr.

The corporate’s selling, general and administrative expenses were $779 million within the quarter, higher than the $644 million last yr. The corporate attributed the rise to the conflict in Ukraine.

For the quarter, the corporate reported a net income of $49.7 million, or 12 cents a share, compared $64.7 million, or 16 cents a share, within the year-ago period. On an adjusted basis, the corporate said it earned 29 cents a share in essentially the most recent quarter, which was greater than the 23 cents per share Wall Street expected.

For the full-year, the corporate stood by its guidance for revenue to grow 11% to 13% from a yr ago. It still expects adjusted earnings of $1.50 to $1.56 per share.

The corporate hiked its quarterly dividend to 12 cents a share, up from 10 cents a share.

Harmit Singh, Levi’s chief financial officer, told CNBC that the corporate decided to reaffirm its fiscal 2022 outlook but to extend its dividend given the lingering effects on the war overseas, the potential slowdown of the worth conscious consumer, continued Covid lockdowns in China and currency changes.

Read the corporate’s earnings release here.

CNBC’s Lauren Thomas contributed to this report.

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