Levi Strauss shares fell sharply in after-hours trading on Wednesday (Thursday AEST) despite the denim retailer delivering better-than-expected quarterly results, raising its full-year outlook and increasing its dividend.
The company reported adjusted earnings per share (EPS) of $0.28, beating market expectations of $0.24, while revenue came in at $1.56 billion compared with forecasts of $1.52 billion.
Despite the strong results, shares declined 5.9% in extended trading.
Levi Strauss lifted its full-year adjusted earnings forecast to a range of $1.46 to $1.52 per share, up from its previous guidance of $1.42 to $1.48.
“We delivered another strong quarter driven by broad-based growth across markets, channels and categories,” said Harmit Singh, Chief Financial and Growth Officer of Levi Strauss & Co.
“That growth translated into higher profitability through gross margin expansion and disciplined SG&A leverage, demonstrating the strength and scalability of our operating model."
The company also raised its full-year revenue outlook, now expecting sales growth of between 7% and 7.5%, compared with its previous forecast of 5.5% to 6.5%.
Around half of the expected sales growth is expected to come from higher prices, while the remaining increase is forecast to be driven by higher unit sales, Singh said.
For the three months ended 31 May, Levi Strauss reported net income of $87.3 million, or 22 cents per share, compared with $67 million, or 17 cents per share, in the same period a year earlier.
Revenue increased approximately 8% year-over-year to $1.56 billion from $1.45 billion.
Speaking to CNBC, Chief Executive Officer Michelle Gass said the company's core customer base remained resilient despite higher fuel costs. She said about two-thirds of quarterly sales growth came from increased unit volumes rather than price increases, supporting the decision to raise guidance and its dividend.
“Our demand remains healthy,” Gass said. “We’re seeing strength across our key segments of consumers, so we have our core Levi’s, but we’re also seeing strength in signature, as well as our new premium blue tab.”
Levi Strauss & Co. (NYSE: LEVI) shares closed 1.2% lower on Wednesday (Thursday AEST), before declining a further 5.9% in after-hours trades. The company maintains a market capitalisation of US$9.37 billion.
