When last we talked about Levi Strauss (NYSE:LEVI), we noted that 2020 was not a great year for the company, despite some gains made and a rebound well underway. The rebound appears to be continuing, as Levi's rolled out its latest earnings report and showed us all that perhaps the biggest name in pants is well on its way to coming back fully.
A Solid Earnings Report
The good news right off the bat is that Levi's essentially won its earnings report. Both revenue and earnings came in over forecasts, with earnings coming in at $0.20 per share against an expected earnings figure of $0.15 per share. Revenues came in at $1.386 billion for the quarter, which was also ahead of estimates.
As good of news as that is, though, it doesn't hold up well against the previous year's figures. Both revenue and earnings were down against figures from the fourth quarter of 2019, and this was despite an extra year in 2020 coming into play. Due to Levi's fiscal calendar, 2020 had two Black Fridays to help out, even if 2020's Black Friday sales were oddly scheduled that year. Revenues were down 12% against the same time last year, reports note, though that was up from the third quarter figures, where revenues were down 27% against the previous year's figures.
Online sales, not surprisingly, gave Levi's a huge boost, as online business was up 34% against the same time the preceding year. That shows that not only did Levi's have a solid online presence to begin with, but that that solid presence served the company well when it became just about the only way to buy pants for a few months last year.
Analysts are Sticking With It
The analyst consensus, meanwhile, is now very clear on its opinion of Levi's: buy. For the last month now, our latest research finds the consensus has held the same ratio: nine “buy” ratings and nothing else. Not a “sell”, not a “hold”, just “buy”. That's improved steadily over the last six months; six months ago, there were two “hold” ratings to go along with the seven “buy” ratings, and three months ago, there was still one “hold” against seven “buy” ratings.
The price target has also trended upward steadily throughout the last six months. Six months ago, it started off at $18.88, before proceeding to $20 even three months ago. A month ago, it picked up a little change to go to $20.44, and now, we have $22.78 for a consensus, which represents the least upside for the company in the last six months.
So far this year, Levi's has seen just three adjustments, from Citigroup, Telsey Advisory Group, and JPMorgan Chase, all of which adjusted their price targets upward. The adjustments weren't large price-wise—Citigroup had the biggest with a $6 upward adjustment from $19 to $25—but on a percentage basis, they were substantial.
A Future Beyond Pants
While Levi's has made a name for itself as a vendor of pants worldwide, in more recent days it has worked to go beyond that, and that may be the best news of all. It's already issued some cautions about future earnings, as new versions of COVID-19 emerge and start potentially playing havoc with the retail market once again, but it's also working to ameliorate those potential losses with new products. Recently, Levi's announced that it was launching a collaborative release with The Pokemon Company—a joint venture with Nintendo (OTCMKTS:NTDOY)—that would mean a line of Pokemon-branded denim jackets from Levi's. Early teasers show some highly colorful garb covered in Pokemon characters.
For those who think that might be a bit childish, Levi's has also been spotted working with Target (NYSE:TGT), who owned 2020 through small-footprint store growth and huge online shopping. The duo will be working together to bring out a line of home décor and household items. Target has big expectations for this line, believing that the releases will ultimately be “collector's items”.
Regardless of how this all ultimately works out, take heart. Levi's may have vaulted to prominence on the strength of comfortable blue pants, but it's working to expand its lineup into some areas that may not be expected. That's the sign of a company that's eager to grow, and though the brightly-colored gaming apparel and unexpected appearances in housewares may not pan out, the fact that the company is trying new things is proof that it's working to make itself better.
That's a point that's likely to appeal to investors, and drive further gains in the months ahead as, hopefully, Levi's finds another major market to expand into and make itself that much better in the process.
Companies in This Article:
