Levi Strauss & Co. (NYSE:LEVI) reported stronger-than-expected results for its first quarter on Tuesday.
Due to the timing of the company’s fiscal year end, the company's first fiscal quarter of 2020 included the benefit of the calendar 2019 Black Friday week. However, the mid-quarter outbreak of COVID-19 adversely impacted the company’s first quarter net revenues in Asia by an estimated $20 million.
Net revenues growth of 5% on a reported basis, 6% in constant-currency; Black Friday benefited the year-over-year net revenues growth comparison by about three percentage points on both a reported and constant-currency basis; adverse impact of COVID-19 and the continuing unrest in Hong Kong was estimated to be approximately two percentage points
Gross margin increased 110 basis points on a reported basis to 55.7%, the company's highest quarterly gross margin in its recent history, reflecting the benefit of price increases, direct-to-consumer and international sales growth, and a reduction in sales to the off-price channel; currency impact to the gross margin comparison was insignificant.
Net income up 4%, and adjusted net income up 8%, primarily due to lower income tax rate, offset in part by the timing of advertising and other administrative costs.
Chief Financial Officer Harmit Singh said, "Significant gross margin expansion, lower inventory and higher earnings all contributed to strong financial performance in the first quarter of 2020.
“We've built a healthy balance sheet that provides us significant liquidity to both weather the storm in the near term and emerge from this stronger, with our long-term growth algorithm intact.”
Shares gained 59 cents, or 4.9%, in $12.60 soon after Wednesday’s opening.
