Levi Strauss & Co. (NYSE:LEVI) saw its shares gain sharply early Wednesday, after the jean giant reported an unexpected profit for the third quarter. The company’s sales also exceeded analysts’ expectations
Net revenues declined 27% on a reported basis; the decrease was primarily due to the impacts of the COVID-19 pandemic, including reduced traffic and ongoing closures of company-operated and third-party retail locations for portions of the quarter and in certain markets.
LEVI also goes on to say gross margin increased 130 basis points on a reported basis to 54.3%. Adjusted gross margin increased 60 basis points to 53.6%, primarily due to price increases and a higher proportion of sales in the higher-margin direct-to-consumer channel.
The company recorded net income for the quarter of $27 million and adjusted net income of $31 million, as compared to $124 million and $128 million, respectively, in the third quarter of the prior year.
The decline is primarily attributable to the adverse revenue impact of COVID-19, higher interest expense reflecting the company’s actions to enhance its liquidity position, and a higher tax rate.
Remarked CEO Chip Bergh, "As we continue to navigate the COVID-19 pandemic and its impact, we are laser focused on the areas that will drive value and enable us to emerge stronger on the other side, including elevating our already iconic brand, investing in digitization, and accelerating our efforts to diversify across geographies, product categories and distribution channels, including doubling down on our fast-growing direct-to-consumer business."
LEVI shares galloped $1.19, or 8.1%, to $15.93.
