Levi Strauss Q4 Earnings Beat Estimates, Gross Margin Rises Y/Y

Levi Strauss & Co. LEVI reported fourth-quarter fiscal 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Also, both metrics improved year over year.Find latest EPS estimates and surprises on Zacks Earnings Calendar.The company delivered a strong fiscal fourth quarter and holiday season, with broad-based strength across women’s, men’s, DTC and wholesale. The improved performance indicates the successful transformation into a best-in-class omnichannel retailer, supported by a solid product pipeline, continued marketing efforts and retail expansion.Levi, one of the world's largest brand-name apparel companies and a global leader in jeans wear in the Americas, Europe and Asia, posted quarterly adjusted earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 48 cents and increased 13.6% from adjusted earnings of 44 cents reported in the prior-year period. Net revenues of $1.84 billion surpassed the Zacks Consensus Estimate of $1.72 billion. The metric increased 12% on a reported basis and 8% on an organic basis year over year.Levi Strauss & Co. Price, Consensus and EPS Surprise  Levi Strauss & Co. price-consensus-eps-surprise-chart | Levi Strauss & Co. QuoteLEVI’s Quarterly Performance: Key Metrics & InsightsDirect-to-Consumer (“DTC”) net revenues showed a significant increase of 19% on a reported basis and 14% on an organic basis. Organic DTC growth was driven by an  increase of 11%, 17% and 8% in the United States, Europe and Asia, respectively. E-commerce net revenues grew 19% on a reported basis and 14% organically. In the fiscal fourth quarter, DTC accounted for 45% of total organic net revenues.Wholesale net revenues grew 7% on a reported basis and 3% on an organic basis. Other Brands’ revenues increased 10% on a reported basis and 5% on an organic basis. Dockers revenues increased 9% on a reported basis and 5% on an organic basis. Beyond Yoga revenues grew 10% on a reported and 4% on an organic basis.In the Americas, revenues increased 12% on a reported basis and jumped 9% on an organic basis. In Europe, revenues increased 15% on a reported basis and 6% on an organic basis. In Asia, revenues were up 9% on a reported basis and an organic basis, buoyed by growth across the majority of the markets.LEVI’s Margins & Expenses UpdateThe gross profit increased 18.7% year over year to $1.13 billion. The gross margin expanded 350 basis points (bps) to 61.3% in the fiscal fourth quarter. This growth was primarily driven by lower product costs, including savings from Project Fuel initiatives, a favorable channel mix and an increase in full-price sales.Operating margin improved to 11.5%, up from 9.2% in the year-ago period. Adjusted EBIT margin increased 120 bps to 13.4% compared with 12.2% in the last year, driven by gross margin expansion.Adjusted SG&A increased 17.4% to $880 million, up from $750 million in the last year. As a percentage of revenues, adjusted SG&A rose 220 bps to 47.8%. This increase was due to higher investments in A&P, increased distribution expenses due to DC transitions and higher compensation incentives tied to strong fiscal fourth-quarter performance, partially offset by leverage on selling expenses. LEVI Stock Past Three-Month Performance Image Source: Zacks Investment Research Levi’s Other Financial SnapshotsLevi’s ended the quarter with cash and cash equivalents of $690 million and total liquidity of $1.5 billion. As of Dec. 1, 2024, long-term debt and total shareholders’ equity were $994 million and $1.97 billion, respectively. In fiscal 2024, net cash generated from operating activities was $898.4 million and adjusted free cash flow was $231.6 million.In the fiscal fourth quarter, the company returned $51 million to its shareholders through dividends and share repurchases. This included a 13 cents per share dividend, up 8% from the previous year, and approximately $30 million in share repurchases, retiring 1.6 million shares.Management declared a cash dividend of 13 cents per share, totaling $51 million, payable on Feb. 28, 2025, to its shareholders of record as of Feb. 12. As of Dec. 1, 2024, the company had $590 million remaining under its existing share repurchase authorization, which has no expiration date.What to Expect From LEVI in FY25?For fiscal 2025, reported net revenues are expected to decline 1% to 2%, while organic net revenues are anticipated to grow between 3.5% and 4.5%. Adjusted EBIT margin is anticipated to expand to 10.9-11.1%, with a tax rate of approximately 23%. Adjusted earnings per share is forecasted to be between $1.20 and $1.25, incorporating an estimated 20-cent headwind from foreign exchange and a higher tax rate.Shares of this Zacks Rank #4 (Sell) company have gained 5.9% in the past three months compared with the industry’s growth of 25.5%.Stocks to ConsiderWe have highlighted three better-ranked stocks, namely Abercrombie & Fitch Co. ANF, lululemon athletica inc. LULU and The Gap, Inc. GAP.Abercrombie is a specialty retailer of premium, high-quality casual apparel. It has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the reported levels of fiscal 2024. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It currently has a Zacks Rank #2. The Zacks Consensus Estimate for LULU’s fiscal 2025 earnings and sales indicates growth of 12.5% and 9.7%, respectively, from the reported figures of fiscal 2024. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently has a Zacks Rank #2.The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.7%, respectively, from the reported figures of fiscal 2024. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report The Gap, Inc. (GAP): Free Stock Analysis Report Levi Strauss & Co. (LEVI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks