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Tuesday, July 7, 2020

-=Levi Strauss (LEVI) reported earnings on Tue 7 July 20 (a/h)

Strauss misses by $0.05, misses on revs, not providing guidance, plans to eliminate about 700 positions
  • Reports Q2 (May) loss of $0.48 per share, $0.05 worse than the S&P Capital IQ Consensus of ($0.43); revenues fell 62.1% year/year to $498 mln vs the $564.36 mln S&P Capital IQ Consensus.
  • In the Americas, net revenues declined 59 percent on a reported basis. The decrease in net revenues was across channels and brands due to the impacts of COVID-19 and the temporary closure of company-operated and third-party retail locations across the region. The majority of these locations closed mid-March and remained closed through the end of the quarter.
    • In Europe, net revenues declined 68 percent on a reported basis.
    • In Asia, net revenues decreased 61 percent on a reported basis.
  • Adjusted gross margin was 51.5%, a decline of 180 basis points, primarily reflecting lower wholesale gross margins, due to a higher proportion of Europe's sales in lower margin markets and channels, which was partially offset by the benefit of price increases.
  • The company has made the decision to reduce its non-retail, non-manufacturing workforce by about 700 positions, or roughly 15%, which it expects will generate annualized savings of $100 mln.
  • Guidance: Given the ongoing substantial uncertainty resulting from the COVID-19 pandemic and related economic impact, the company has withdrawn all guidance provided on January 30, 2020, and is not providing further guidance at this time.
  • Although trends appear to be improving sequentially, the ultimate health and economic impact of the COVID-19 pandemic remains highly uncertain. The company expects that its business and results of operations, including net revenues, earnings and cash flows, will continue to be significantly adversely impacted for at least the balance of 2020, and there remains the possibility of additional COVID-19 related inventory and other charges.

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