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Levi Strauss Forecasts Upbeat Full Year as Apparel Demand Bounces Back

The Levi's "batwing" logo T-shirt has become a common sight on city streets worldwide. Getty Images.

Levi Strauss & Co on Thursday forecast a strong full-year profit after handily beating quarterly earnings estimates as demand for its jeans, tops, and jackets rebound quicker than expected across its markets.

Shares in Levi’s climbed 3 percent in extended trading as it also increased its third-quarter dividend by 33 percent.

Customers refreshing their wardrobes following months-long lockdowns and Covid-19-related restrictions are boosting sales of loose-fitting jeans and street clothes at Levi’s and its peers American Eagle and Abercrombie & Fitch.

“About 35 percent of consumers in the US have changed waist sizes. And some of it is up and some of it is down, but either way, it creates another reason for people to go out and update their wardrobe,” chief executive officer Charles Bergh said on an earnings call.

Levi’s is also benefiting from its collaborations with a slew of brands, including Valentino, and its push toward direct-to-consumer sales that largely helped boost its adjusted gross margin by 670 basis points to 58.2 percent in the second quarter.

Lower promotions, price increases and sourcing savings also supported margins, said the company, known for its Signature and Levi’s 501 jeans.

The Denizen and Dockers brands’ owner forecast fiscal 2021 per-share profit between $1.29 and $1.33, above estimates of $1.15. It also forecast second-half revenue to be above 2019 pre-pandemic levels.

Net revenue more than doubled to $1.28 billion in the second quarter ended May 30, beating Refinitiv IBES estimates of $1.21 billion. Excluding items, Levi’s earned 23 cents per share, versus estimates of 9 cents.

Revenues through digital channels rose 75 percent as people have taken to the ease of getting their orders delivered at their doorsteps.

Levi’s said it would improve its digital business by investing in distribution centres and its program that allows customers to pick up online orders in stores.

Reporting by Praveen Paramasivam in Bengaluru; Editing by Maju Samuel.

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