Levi Strauss On Thursday extended its entire year guidance and said it is working to absorb some costs facing high tariffs, but it can change President Donald Trump’s business policy develops,
The denim manufacturer does not disclose its major manufacturing hub, but most of its supply comes from Southeast Asia. Many countries in the region have been targeted by Trump’s so -called mutual tariff scheme.
According to LSEG, Levy is currently expected to be better than its full-year adjusted income $ 1.25 and $ 1.30 per share and $ 1.20 and $ 1.25 to be better. However, this forecast only considers 30% tariff on China, where about 1% of its products and 10% tariffs on the rest of the world, which can turn into a trump because Trump interacts with the major manufacturing areas.
In an interview with CNBC, Lavy Finance Head, Hormat Singh said that most of the Source of Levi is from countries such as Pakistan, Bangladesh and Indonesia. Tusrap In recent times Bangladesh and Indonesia threatened With duties of over 30%. It is not clear how sour the levy products are sour from those areas, and 60% of the levy business is outside the US.
For now, Levi said that what it can do is planning to absorb it. As currently the policy stands, it is estimated that tariffs will only affect trade from $ 25 million to $ 30 million for the rest of the year, or 2 to 3 cents per share.
CEO Michelle Gas said, “We are doing our share. We are absorbing some costs. What helps is that our business is so strong.” “We are pulling back on promotion anyway, it is more full of full-value sales, and some of our new innovations, our new fit, we are pricing on a premium, and they are buying. So all those things help us navigate us at this time of tariff headwind.”
Asked by an analyst whether the levy should have increased its guidance for the economy during such an indefinite time, Singh said the company hopes to spend its consumer.
“Given that we have three-fourths of high singles growth, we continue the speed, because the consumer … is generally flexible and a constant fan of the brand,” he said.
Beyond the tariff, Levi earned the second quarter to defeat expectations on the financial year and lines. Here is how the Jeans Company compared the Wall Street, based on a survey of analysts by LSEG:
- earnings per share: 22 cents adjusted vs. 13 cents required
- Income: $ 1.45 billion versus $ 1.37 billion is expected
Levi shares increased by about 8% in extended trading.
The company reported for a period of three months ended on 1 June was $ 67 million or 17 cents per share, compared to $ 18 million, or 4 cents per share. In addition to other costs, levy recorded an income of 22 cents per share of 22 cents.
Sales grew by about $ 1.36 billion to about $ 1.45 billion from $ 1.36 billion a year ago.
Given the strong demand, Levi increased its full year’s revenue guidance and now expected to sell between 1% and 2% from the previous guidance of 1% to 2%. This limit is well ahead of expectations. According to LSEG, analysts estimated a decline of 5.2%in revenue.
Levy cut its gross margin guidance by 0.2 percent, and now it is expected that gross margin will increase by 0.8 percent as the impact is on tariff profits.
For its current quarter, Levy hopes that according to LSEG, expectations of a decline of 4.6% will be well sales between 3% and 4%. According to LSEG, IT per share makes income between 28 cents and 30 cents, corresponding to the expectations of about 30 cents.
Since the gas took over as the CEO of the retailer, he worked to reduce parts of the business. In May, the company announced that it will happen Sell its doctors brand For the authentic brand group.
He has also worked to make direct sales to consumers, such as focus on e-commerce and store instead of wholesale parties. Messi’s And KohalBecause it comes with high margin and gives the company better insight into its customers.
“We are working with more rigor and discipline and are actually infected with the entire company one [direct-to-consumer] The first mentality, “Gas said on a call with analysts.” Our ownership and operated channels represent more than half of our business, and they continue to distribute healthy comps continuously, with improvement in profitability. ,
While in e-commerce shopkeepers, it comes with better data insight, it can be an expensive and complex channel to operate and it is difficult for some companies to earn money from digital sales. Singh told analysts that it was also true for levy, but online sales are now beneficial as it is capable of better advantage of its costs through the scale.
During the quarter, the gross margin of the levy reached her which she called a record 62.6%, which was inspired by a low markdown, low product cost and 11% increase in direct sales.
Levi, who has long completed a male shopkeeper, has been trying to win over female consumers and expand from a denim company from a denim company. During the quarter, it wanted the victory with efforts in which revenue for women’s costumes with 14% and 16% sales. Singh said that the women category of Levy is the “highest gross margin business” of the retailer.
“The consumer is definitely responding to this direction and voting. So as we look forward, we are convinced,” the gas told CNBC. “We know that there is uncertainty in the world right now, but the consumer is proving quite flexible for the levy.”
At the core of Levi’s strategy, it is ensuring that it is still relevant with consumers. A recent partnership with Beyonse has helped the company to be at the top of the mind with shopkeepers, especially when the singer has continued his cowboy Carter Tour.
In May, the company launched a limited-sanskrit drop of the Bayoncé X Levi’s T-shirt, the first product to come in collaboration.
It also launched a partnership with Nike, which went live on Thursday at Levi’s website and some of its stores. The collection includes a denim-inspired tech on Air Max 95.
