Levi Strauss Stock Looks Attractive Here

The stock of Levi Strauss & Co., a legendary clothing brand (NYSE: LEVI), is strong in the reopening phase following the pandemic.

Grow Your Business,
This is not your inbox

Keep up to date and sign up for our daily newsletter!

Read for 5 minutes

MarketBeat originally published this story
The iconic clothing brandLevi Strauss & Co. (NYSE: LEVI)Stock is doing well in the post-pandemic reopening phase. It is clear that the Company emerged stronger from the pandemic and is now more e-commerce-oriented. The momentum should be maintained in the acceleration of COVID vaccines. Its direct-to-consumer channel (DTC), largely through digital channels, was bolstered by the pandemic. This resulted in strong recovery as well as continued strength when brick-and-mortar stores reopen. The management was able cut costs and hoard money during the pandemic, while simultaneously boosting its DTC channel and digital channels. This is in addition to its iconic brand recognition of 167 years. Investors may be concerned about the end of the tailwind that was the shift from casual wear to lockdowns. Investors who were unable to make the rally this year may be able to take advantage of opportunistic pullbacks and get their shares back from Levi Strauss.

Qu2 2021 Earnings Report

Levi Strauss released their Q2 2021 results for quarter May 2021 on July 8, 2021. Non-GAAP earnings per share were $0.23 which beat consensus analysts estimates by $0.14. The topline revenue growth was up by 156.5% YoY to $1.28 Billion compared with the analyst estimates of $1.21 Billion. Record gross margins of 58.8% were achieved due to higher direct-to consumer net revenues, price rises, sourcing savings and full-price sales. All digital channels saw an increase of 75% in ecommerce. Ecommerce penetration grew to 23% from total sales. Chip Bergh, CEO of Levi’s stated that the company generated strong momentum with an accelerated recovery in revenues. This resulted in growth across all channels and regions. The strength of our brands, our ability to capitalise on changing denim trends, and the continued shift towards casualization were key factors in this success. We are focusing on strengthening our strategic priorities as we enter the second half 2021. These include leading with our brand and accelerating direct-to consumer connections. Diversifying across channels and categories is also our focus.

The Upside Guide

Levi Strauss has raised its guidance range for fiscal year 2021 from $1.29-$1.33 compared to the $1.15 consensus analyst estimates. According to the Company, 2H 2020 revenue growth is expected to be 27%-29%, compared to current estimates of 24%. This would result in an increase of 4%-5% versus 2019. Levi’s has also raised the quarterly dividend from $0.06 to $0.08 per shares. Harmit Singh, Levi’s Chief Financial Officer, stated that “We substantially exceeded our expectations in terms of revenue, adjusted gross margin and adjusted EBIT.” The recovery in many markets is faster than expected, and the economy has improved. Harmit Singh is chief financial officer at Levi Strauss & Co. He stated, “As the future looks ahead, we are raising our expectations for revenue and profits. We have a strong balance sheet and continue to return cash shareholders. Dividends are now at pre-pandemic levels.

Conferencing Call Tips

Bergh, Levi Strauss’ CEO set the tone: “Our results reflect our brand’s enduring power in an age when consumers seek authenticity from businesses that share their values.” We are seeing strong casualization and denim trends. But we also see the benefits of our ongoing implementation of strategic initiatives. We are thrilled to see customers returning to our shops as the markets reopen and experience improving traffic patterns. Although the influenza pandemic is still affecting our business, the rapid revenue recovery was encouraging. All regions and channels saw growth compared with the prior year. Reports on revenues for Q2 2019 were only down 3 percentage points. This quarter saw record gross margins for the third consecutive quarter. His continued: “In our DTC channel we have continued to accelerate the omni-channel capabilities so that our customers can access product whenever and wherever they want.” The company’s e-commerce operation grew by 42%, which is a remarkable result given the strong growth we had in previous years.

Is DTC a Mortar and Brick Killer?

All of the concerns raised by investors about DTC drops as store reopens were addressed by CEO Bergh. “We are particularly happy that the growth rate has remained strong even though brick-and mortar stores reopened during the second quarter. We are investing in the latest technology and increasing our fulfillment capabilities. Our largest distribution center, Henderson, Nevada, was opened earlier in the month to fulfil orders via e-commerce and retail channels. He said that data-driven predictive analysis is transforming how he plans his business. AI will now predict the initial demand for every product in the next season. Our first wave of tests showed an increase in accuracy when AI-driven demand forecasting was used. Scaling it will allow for more accurate inventory investment, less clearance and markdowns, reduce waste and improve sustainability. All of these factors should help to increase our margins. Combining this with ongoing AI work in pricing and promotion, it will prove to be a powerful combination.

Levi Strauss Stock Looks Attractive Here

LEVI Opportunistic Pullback Levels

The rifle charts can be used to get a precise view of the LEVI stock landscape on both a daily and weekly basis. A weekly rifle chart shows a bizarre rising 5-period moving mean (MA), and a flattening 15 period MA in a downtrend. A stochastic mini puppy is the weekly stochastic. Strong resistance is located near $30.01Fibonacci (fib) level.Weekly Bollinger Bands have been reducing at $27.55 higher BBs, and $22.16 lower. Weekly market structure highs (MSH), sell triggers below $27.31. Daily rifle charts are in an active downtrend. The MA is falling at $27.05, with lower BBs of $25.92. A breakout at or above $24.36 will trigger the daily market structure low (MSL), buy.Investors can be cautious about opportunistic pullbacks. These levels include the $25.92 fib and $25.25 fib. The $32.53 to $45.41 level are the upside trajectories.  

The Featured ArticleWhat’s a reverse stock split?

Publiated at Wed 28 July 2021, 11:09:10 +0000

Leave a Reply

Your email address will not be published. Required fields are marked *