Levi Strauss Jumps After Its First Report as Public Company

(Bloomberg) -- Levi Strauss & Co. jumped after its first quarterly report as a public company impressed investors.

• The apparel maker, which completed an initial public offering last month and then saw its stock surge, said revenue for the fourth quarter rose 7 percent to $1.4 billion. Analysts had yet to provide estimates, but Levi did say last month that sales for the quarter would gain 6 to 7 percent.

Key Insights

• Levi’s executives pitched the IPO to investors as a growth story, and the results back that narrative up. One of the main drivers is expected to be its push into categories beyond jeans, like tops and footwear. It didn’t give a breakout of segment performance in the report, but executives may offer more detail on this afternoon’s call.
• The other growth engine is expected to be Asia, and specifically China, where Levi has a small business but sees big opportunity. Revenue from that region rose 8 percent to $253 million -- marking rapid growth for what’s still the company’s smallest region.
• Levi said it will open nearly 100 new company-operated stores this year. Chief Executive Officer Chip Bergh said the majority of the store openings will be in Europe and Asia, though both mainline and outlet stores will open in the U.S., too. “We’ve got a good model, it’s very profitable and we will continue to expand in those markets,” he said.
• The jeansmaker had been cutting costs to improve margins in the run up to going public. Last quarter, gross margin narrowed slightly to 54.6 percent, but it sees improvement ahead: Levi says its constant-currency adjusted EBIT margin will be flat-to-slightly up this year, better than the “roughly flat” it had estimated in February.

Market Reaction

• Levi shares rose as much as 3.1 percent to $22.55 in late trading Tuesday, before paring some of the gains. The stock has gained 29 percent since its IPO last month through Tuesday’s close.

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