Levi Strauss Posts Beat-And-Raise Quarter, Analysts See ‘More Upside In 2H’

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Shares of Levi Strauss & Co (NYSE: LEVI) recovered slightly in early trading on Thursday, after Wednesday's selloff on second-quarter results.

Here are some key analyst takeaways:

  • JPMorgan analyst Matthew Boss reiterated an Overweight rating, while raising the price target from $32 to $33.
  • Needham analyst Tom Nikic reaffirmed a Buy rating and price target of $28.
  • BTIG analyst Robert Drbul maintained a Buy rating and price of $27.
JPMorgan: Levi Strauss reported adjusted earnings of 28 cents per share. The apparel company beat Street expectations of 24 cents per share. Boss said an 8% revenue growth drove the beat along with an adjusted operating margin expansion to 9%. That's above consensus estimates of 5% and 8.9%, respectively, he added.

The company's organic revenue growth of 5.7% exceeded the consensus of 4%, supported by outperformance in the Americas and Asia, while Europe came in line with expectations, the analyst stated. This organic growth figure was negatively impacted by headwinds associated with wholesale timing in Europe, suggesting that Levi's underlying organic revenue growth was 8%, representing an acceleration from the previous quarter's 7%, he noted.

Needham: Levi Strauss reported another strong quarter and seems to be set up well for the back half of the year. Nikic said the company continued to execute well on its strategic priorities. The company delivered a broad-based performance across regions, including a second consecutive positive quarter in China, he added.

Management raised their full-year outlook for revenue growth to 5.5%-6.0%, from their prior projection of 4.5%-5.5%, and guided to earnings of $1.46-$1.52 per share, the analyst stated. "They've beaten-and-raised 2x this year, and we see opportunity for more upside in 2H," he further wrote.

BTIG: Levi Strauss reported net revenues of $1.6 billion, up 8% year-on-year, Drbul said. Gross margins expanded 4 bps year-on-year to 62.6%, while adjusted EBIT margins improved 80 bps to 9.0%, he added.

The company ended the quarter with "a clean inventory position," with $1.16 billion worth of inventories, down 7.3% year-on-year, reflecting a "healthy sell-through," he noted.

"The quarter also highlighted continued progress against LEVI's denim lifestyle strategy," Drbul further stated.

LEVI Price Action: Shares of Levi Strauss had risen by 2.03% to $24.86 at the time of publication on Thursday.