Levi Strauss has beaten Wall Street expectations for the first quarter and raised its full-year guidance, as strong global sales and continued momentum in direct-to-consumer helped drive another solid set of results.
The denim giant posted adjusted earnings per share of $0.42 (£0.32) for the quarter, ahead of analyst expectations of $0.37 (£0.28), while revenue came in at $1.74bn (£1.31bn), above forecasts of $1.65bn (£1.25bn).
Sales were up around 14 per cent year on year from $1.53bn (£1.16bn), while net income rose to $175.8m (£132.8m), compared with $135m (£101.9m) in the same period last year.
The uplift was driven by growth across all major regions.
Revenue in the Americas increased 9 per cent on a reported basis, while Europe rose 24 per cent and Asia climbed 13 per cent. On an organic basis, growth stood at 7 per cent in the Americas, 10 per cent in Europe and 12 per cent in Asia.
The company also continued to make progress with its direct-to-consumer strategy, with sales through its own stores and website up 16 per cent.
Direct-to-consumer now accounts for 52 per cent of total revenue, underlining a major shift for a business that has historically leaned heavily on wholesale.
Comparable direct-to-consumer sales rose 7 per cent during the quarter, while Beyond Yoga delivered revenue growth of 23 per cent.
The performance has prompted Levi Strauss to lift its outlook for the full year. It is now forecasting earnings per share of between $1.42 and $1.48 (£1.07 to £1.12), alongside organic revenue growth of 4.5 per cent to 5.5 per cent and an adjusted EBIT margin of around 12 per cent.
Chief executive Michelle Gass said the business expected direct-to-consumer to remain above half of total sales for the rest of the year, even as its wholesale arm continues to grow.
Growth was supported not only by volume, but also by pricing.
Finance chief Harmit Singh said roughly half of the company’s growth in the quarter was driven by higher prices, with the remainder coming from unit sales.
Levi Strauss said its expanding direct-to-consumer mix is helping to improve profitability, despite the higher short-term costs associated with reshaping its distribution model.
The retailer is also benefiting from the breadth of its offer across different customer groups. Gass said value-focused brand Signature grew 16 per cent in the quarter, while Red Tab was up 9 per cent and premium line Blue Tab also continued to gain ground.
She said: “We talked about over the last couple years, we made big, bold moves like selling Dockers and other brands and businesses. Now we’re really focused on segmentation around the Levi’s umbrella.
“We feel like we’re really covered to serve the consumer across really every demographic and psychographic cohort.”
Levi Strauss also pointed to the benefits of its international footprint, with around 60 per cent of its business generated outside the US, giving it a greater level of diversification at a time when consumer spending remains under close watch.
Shares in the company rose in after-hours trading following the results, as investors responded positively to the earnings beat and stronger guidance.
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