The Levi Strauss & Co. label is seen on clothing at a store at the Woodbury Common Premium Outlets in Central Valley, New York, U.S., February 15, 2022.
Andrew Kelly | Reuters
Shares of Levi Strauss rose 12% on Thursday after the retailer raised its full-year profit forecast and reported holiday revenue that beat expectations.
Levi's reported its fiscal first-quarter earnings late Wednesday and said it expects fiscal 2024 adjusted earnings per share to come in between $1.17 and $1.27, up from a previous range of $1.15 to $1. ,25.
Analysts had expected a forecast of $1.21 per share, according to LSEG, formerly known as Refinitiv.
As the retailer faces a slowdown in discretionary spending, it is focusing on what it can control: cutting costs and becoming more efficient so it can improve its bottom line.
In January, Levi's launched an initiative designed to accelerate profitable growth and cut costs. As part of the project, Levi's cut approximately 12% of its global workforce. The company also exited its lower-margin Denizen business, relying less on aggressive discounting to drive sales.
The company is also seeing record sales online and through its own stores rather than through department stores like Macy's And Kohl'sthat have a lower margin.
“The benefits of our Project Fuel initiative are just beginning to unfold, which will continue to improve the agility and efficiency of our business,” Chief Financial Officer Harmit Singh said on a call with analysts. “We will also continue to generate positive free cash flow through inventory and working capital management.”
During the quarter, fewer promotions and lower product costs helped Levi's gross margin rise 2.4 percentage points to 58.2%, compared to 55.8% a year earlier.