After stabilizing in the $17.50 area following its latest earnings, iconic garment manufacturer Levi Strauss stock (NYSE: LEVI) slide may be ending. Despite Omicron and inflationary pressures, the popular and sticky denim brand suffered from various challenges throughout its initial rebound. Due to supply chain bottlenecks, net revenues have been reduced by roughly $60 million. The company continues to increase direct-to-consumer sales by 35% in its company-owned physical stores and e-commerce.
Direct sales to consumers increased to 39% of total sales in Q1 2022. The epidemic has propelled the company’s digital transformation, as it uses proprietary data analytics, artificial intelligence (AI), and meticulous pricing elasticity analysis to make data-driven decisions. As a result, the company’s global brick-and-mortar business has grown by 50% year over year. In the most recent quarter, the Levi Strauss app in the United States and Europe quadrupled its monthly active users, with ambitions to expand to India in Q2 2022.
Levi Strauss earnings results for Q1 fiscal 2022:
Levi Strauss released their fiscal Q1 2022 profit data for the period ending in February on April 6, 2022. The company announced $0.46 earnings per share (EPS) of Levi’s stock price, which was $0.04 more than consensus analyst projections of $0.42. The company’s revenue increased 21.9 percent year-on-year (YoY) to $1.59 billion, exceeding market expectations of $1.55 billion. The adjusted EBIT margin was 14.9 percent, compared to 13.3 percent a year ago. Direct-to-consumer (DTC) revenue increased 35% year over year, owing to a 48% increase in company-owned stores and a 10% increase in e-commerce.
Chip Bergh, CEO of Levi Strauss, said the robust consumer demand at the start of the year gave excellent momentum across markets, channels, and categories. The brand capitalized on structural tailwinds and effectively handled a challenging operating environment. Also, the team’s rigorous execution of strategic initiatives enabled the company to produce significant top-and bottom-line growth.
Guidance reaffirmed:
The company confirmed fiscal full-year 2022 earnings per share (EPS) on levis stock of $150 to $0.56, compared to $1.53 average analyst projections, on revenues of $6.4 to $6.5 billion, vs. $6.44 billion expectations. Harmit Singh, CFO of Levi Strauss, said, “We had a solid first-quarter financial performance, delivering double-digit sales growth and a record gross margin, resulting in an adjusted EBIT margin of 14.9 percent. Despite the added headwinds from ongoing macro concerns, we have the confidence to confirm our full-year guidance due to continued consumer demand across our portfolio of brands and our proven ability to generate profitable growth.“
Using rifle charts on a daily and weekly time frame gives a clear picture of the Levi’s stock price landscape. The weekly rifle chart reached a bottom at the Fibonacci (fib) level of $17.35. The week’s bottom Bollinger Bands (BBs) are at $16.42 fib. The weekly rifle chart’s slump has come to a halt as the 5-period moving average (MA) resistance at $21.10 begins to slant up against the declining 15-period MA.
Takeaway
Considering all the factors mentioned above, the Levi Strauss stock has strong buy indicators with the potential of a 50% upswing from the current levels of $18.74 at the time of this review.
