Levi Strauss & Co’s (LEVI.N) denim jeans and jackets were swept off the racks in the second quarter as people returning to work and social events stuck to the comfortable styles that had dominated during lockdowns.
That, along with higher prices, helped Levi’s trump results estimates and raise its quarterly dividend, sending its shares about 4% higher in extended trading.
Like its peers, Levi’s also hiked prices to counter surging costs of raw material and labor, but the company is yet to see much impact from that on demand as its loose-fitting clothes such as baggy jeans are still being snapped up.
“At the moment, a consumer is likely to decide to put their dollars towards (Levi’s product),” Jane Hali and Associates senior analyst Jessica Ramírez said, adding that there is a denim boom.
Still, revenue from Levi’s value brands including Signature were down mid-single digits in the quarter, signaling that lower-income consumers are starting to feel the pinch from rising inflation, Chief Executive Officer Charles Bergh said.
Those brands represent a small part of Levi’s total revenue.
In the quarter ended May 29, the Dockers and Denizen owner’s total revenue rose 15% to $1.47 billion, above analysts’ expectation of $1.43 billion, according to IBES data from Refinitiv.
Levi’s also reaffirmed its revenue and profit forecasts for 2022 and bumped up its quarterly dividend by 20% to 12 cents per share.
Net income fell 23% though, as the jeans maker recorded $60 million in charges related to the suspension of its operations in Russia.
Excluding items, the 169-year-old company earned 29 cents per share, beating estimates of 23 cents.