David Connolly- David Connolly
Levi Strauss & Co. Reports Third-Quarter 2021 Financial Results
Net Revenues Up 41% Versus Q3 2020 and Up 3% Versus Q3 2019
Gross Margin Expansion Drives Operating Margin Of 14.4%
Diluted EPS Was $0.47 Versus $0.07 in Q3 2020 and $0.30 in Q3 2019
Company Raises Fiscal 2021 Outlook and Authorizes Share Repurchase Program
SAN FRANCISCO--(BUSINESS WIRE)-- Levi Strauss & Co. (NYSE: LEVI) today announced financial results for the third quarter ended August 29, 2021. Due to the significant impact of COVID-19 on prior year figures, this release also includes comparisons to the same period in 2019 for additional context.
Financial Highlights for the Third Quarter
Reported net revenues of $1.5 billion up 41% versus Q3 2020 and up 3% versus Q3 2019
Direct-to-Consumer reported net revenues up 34% versus Q3 2020 and up 4% versus Q3 2019
Global Wholesale reported net revenues up 45% versus Q3 2020 and up 3% versus Q3 2019
Net revenues through all digital channels grew 10% versus Q3 2020 and 76% versus Q3 2019
Digital sales represented approximately 20% of total third quarter revenues
Gross margin was 57.6%; Adjusted gross margin was 57.5%, up 390 basis points from Q3 2020 and 450 from Q3 2019
Operating margin was 14.4%; Adjusted EBIT margin expanded to a third quarter record of 14.8%, up from 7.9% in Q3 2020 and 12.2% in Q2 2019
Net income was $193 million; Adjusted net income was $197 million up from $31 million in Q3 2020 and $128 million in Q3 2019
Diluted EPS was $0.47; Adjusted diluted EPS was $0.48, up from $0.08 in Q3 2020 and $0.31 in Q3 2019
Adjusted free cash flow for the first nine months of 2021 was $251 million, above prior year
Subsequent to Quarter- End:
The company paid back the remaining $200 million balance of its 2025 Notes, returning gross debt back to pre-pandemic levels
The company completed the acquisition of Beyond Yoga, for an aggregate purchase price of approximately $400 million, diversifying the business into the high growth activewear segment
The Board of Directors authorized a $200 million share repurchase program
“We delivered a strong quarter with revenue growth versus pre-pandemic 2019 levels, despite a more difficult macro-environment than we expected,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “These results reflect the strength of the Levi's® brand, improving momentum in our direct-to-consumer business and the scale and agility of our supply chain network where we have executed against macro-headwinds exceptionally well. Our future is bright given our iconic Levi's® brand and the acquisition of Beyond Yoga, which establishes our position in the fast growing, high-margin premium activewear market as we continue to capitalize on global casualization trends.”
“Adjusted EBIT margin exceeded our expectations driven by strong brand momentum,” said Harmit Singh, chief financial officer of Levi Strauss & Co. “Looking ahead, we are raising our outlook across revenues and profits. We have taken pricing actions and believe we have pricing power to mitigate inflationary pressures. Our third quarter performance combined with our confidence in our outlook also enables us to allocate capital across all of our core priorities: investing in our business; paying down debt; closing an inorganic acquisition; and returning cash to shareholders in the form of dividends and a newly-authorized $200 million share repurchase program.”
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