Levi Strauss Tumbles Like Denim Maker's Earning Miss Estimates
(Bloomberg) – Levi Strauss & Co. fell in late trading as profit in the second quarter as a public company was weighted off by higher advertising costs, currency claims and poor IPO costs.
Denim maker on Tuesday created second-quarter profit of 7 cents per share, missing analysts' estimates. Its earnings were hit by $ 29 million of expenses related to the company's IPO, including higher costs.
Key Insights
"I'm not going to worry about the one-off price of the listing," CEO Chip Bergh said in an interview after the earnings. "It's a one-time short-lived hit. We're in it in the long run." Levi has been working to strengthen his network and e-commerce sales, saying that direct consumer business increased by 9% last year, mainly due to these efforts. But that growth comes at a price, with higher investment costs. While revenues topped forecasts, it wasn't enough for investors, who sent the stock down as much as 7.6%. Levi has pushed itself stronger in international markets, and revenue in the quarter increased in both Europe and Asia, and in America. Levi increased its fiscal 2019 net sales growth guidance to the high end of mid-range reach. It is also said that exchange-adjusted EBIT margins will be in the order of 10 basis points, up from a previous forecast from flat to slightly up.
Market reaction
Levi shares fell as low as $ 21.87 in late trading.
For more information, click here. For the company's statement, click here.
To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net
To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson
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