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Levi Strauss Gears Up to Report Q2 Earnings: What's in the Cards?
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Key Takeaways
LEVI's Q2 results are likely to be impacted by inflation, supply-chain issues and FX headwinds.
Q2 is seasonally Levi Strauss' lowest revenue and margin quarter, with minimal tariff impact expected.
Levi Strauss expects Q2 organic revenue growth of 3.5-4.5%, excluding FX and business exits.
Levi Strauss & Co. (LEVI - Free Report) is likely to register a decline in its top and bottom lines when it reports second-quarter fiscal 2025 earnings on July 10, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $1.37 billion, which indicates a drop of 5.2% from the year-ago quarter’s level.
The consensus estimate for quarterly earnings has increased a penny over the past 30 days to 14 cents per share but indicates a decrease of 12.5% from the year-earlier quarter’s tally.
Levi Strauss has an average trailing four-quarter earnings surprise of 23%. It delivered an earnings surprise of 35.7% in the last reported quarter. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Factors Likely to Influence LEVI’s Q2 Results
Levi Strauss’ quarterly results are likely to reflect the impacts of a challenging operating backdrop, including supply-chain disruptions, inflationary pressures and foreign currency translations. Inflation and economic uncertainty have weighed on consumer spending for discretionary items, leading to softness in categories like denim and casual wear. Also, a sluggish performance in the discretionary apparel segment has been a concern. These headwinds, coupled with deleveraged selling, general and administrative costs, are expected to have weighed on the company’s profitability.
Management, at its last earnings call, notified that the fiscal second quarter is seasonally the company’s lowest quarter for revenues and margins in the year. The tariff impact is likely to have a minimal impact on the margin structure for the impending quarter. For the quarter under discussion, LEVI projected organic net revenue growth from continued operations of 3.5-4.5%, excluding nearly 2 points of foreign exchange headwinds and 1.5 points related to the exit of Denizen and the footwear business.
Gross margin was then expected to be up between 80 basis points (bps) and 100 bps, and adjusted EBIT margin is likely to be in the band of 5.5-6% for the quarter under review. Adjusted EPS is envisioned to be 11-13 cents, reflecting about 3 cents of headwind from foreign exchange and a higher tax rate year over year. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $713 million for Americas, indicating a decline of 8.9% sequentially.
On the flip side, Levi Strauss’ quarterly performance is likely to have benefited from omnichannel initiatives and brand strength. The company has been strengthening its omnichannel capabilities, including Buy Online, Pick-up in Store, line-queuing, same-day delivery, mobile checkout and return capabilities, including contactless returns. As part of its ongoing global productivity effort, Project Fuel, it is on track to transition from a mainly owned-and-operated distribution and logistics network in the United States and Europe to a balanced owned and third-party logistics provider.
What the Zacks Model Predicts for LEVI Stock
Our proven model conclusively predicts an earnings beat for Levi Strauss this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Levi Strauss has an Earnings ESP of +2.94% and carries a Zacks Rank of 3 at present.
From a valuation perspective, Levi Strauss offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 14.44x, which is below the five-year high of 141.93x and the Retail - Apparel and Shoes industry’s average of 17.53x, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the current Value Score of B adds weight to this optimistic view.
The recent market movements show that LEVI’s shares have gained 8.8% in the past six months against the industry's 15.8% decline.
Other Stocks With the Favorable Combination
Here are some more companies, which according to our model, too have the right combination of elements to beat on earnings:
The company is likely to register a bottom-line decline when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for a quarterly loss of 61 cents is wider than a loss of 58 cents seen in the year-ago quarter.
Canada Goose’s top line is expected to rise year over year. The consensus estimate for quarterly revenues is pegged at $67 million, which indicates an improvement of 9.1% from the figure in the prior-year quarter. GOOS has a trailing four-quarter earnings surprise of 57.2%, on average.
Boot Barn (BOOT - Free Report) currently has an Earnings ESP of +3.46% and a Zacks Rank of 3. The company is likely to register a decline in the bottom line when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for quarterly EPS of $1.53 indicates a rise of 27.5% from the year-ago number.
Boot Barn’s top line is expected to increase year over year. The consensus estimate for quarterly revenues is pegged at $489.4 million, which implies growth of 15.6% from the prior-year quarter. BOOT has a trailing four-quarter earnings surprise of 3.4%, on average.
Abercrombie (ANF - Free Report) currently has an Earnings ESP of +0.25% and a Zacks Rank of 3. The company is likely to register a bottom-line decline when it reports second-quarter fiscal 2025 results. The Zacks Consensus Estimate for quarterly EPS of $2.25 indicates a decline of 10% from the year-ago quarter’s level.
Abercrombie’s top line is expected to rise year over year. The consensus estimate for quarterly revenues is pegged at $1.2 billion, which indicates an improvement of 4.1% from the figure in the prior-year quarter. ANF has a trailing four-quarter earnings surprise of 11.2%, on average.
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Levi Strauss Gears Up to Report Q2 Earnings: What's in the Cards?
Key Takeaways
Levi Strauss & Co. (LEVI - Free Report) is likely to register a decline in its top and bottom lines when it reports second-quarter fiscal 2025 earnings on July 10, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $1.37 billion, which indicates a drop of 5.2% from the year-ago quarter’s level.
The consensus estimate for quarterly earnings has increased a penny over the past 30 days to 14 cents per share but indicates a decrease of 12.5% from the year-earlier quarter’s tally.
Levi Strauss has an average trailing four-quarter earnings surprise of 23%. It delivered an earnings surprise of 35.7% in the last reported quarter. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Factors Likely to Influence LEVI’s Q2 Results
Levi Strauss’ quarterly results are likely to reflect the impacts of a challenging operating backdrop, including supply-chain disruptions, inflationary pressures and foreign currency translations. Inflation and economic uncertainty have weighed on consumer spending for discretionary items, leading to softness in categories like denim and casual wear. Also, a sluggish performance in the discretionary apparel segment has been a concern. These headwinds, coupled with deleveraged selling, general and administrative costs, are expected to have weighed on the company’s profitability.
Management, at its last earnings call, notified that the fiscal second quarter is seasonally the company’s lowest quarter for revenues and margins in the year. The tariff impact is likely to have a minimal impact on the margin structure for the impending quarter. For the quarter under discussion, LEVI projected organic net revenue growth from continued operations of 3.5-4.5%, excluding nearly 2 points of foreign exchange headwinds and 1.5 points related to the exit of Denizen and the footwear business.
Gross margin was then expected to be up between 80 basis points (bps) and 100 bps, and adjusted EBIT margin is likely to be in the band of 5.5-6% for the quarter under review. Adjusted EPS is envisioned to be 11-13 cents, reflecting about 3 cents of headwind from foreign exchange and a higher tax rate year over year. The Zacks Consensus Estimate for quarterly revenues is currently pegged at $713 million for Americas, indicating a decline of 8.9% sequentially.
On the flip side, Levi Strauss’ quarterly performance is likely to have benefited from omnichannel initiatives and brand strength. The company has been strengthening its omnichannel capabilities, including Buy Online, Pick-up in Store, line-queuing, same-day delivery, mobile checkout and return capabilities, including contactless returns. As part of its ongoing global productivity effort, Project Fuel, it is on track to transition from a mainly owned-and-operated distribution and logistics network in the United States and Europe to a balanced owned and third-party logistics provider.
What the Zacks Model Predicts for LEVI Stock
Our proven model conclusively predicts an earnings beat for Levi Strauss this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Levi Strauss has an Earnings ESP of +2.94% and carries a Zacks Rank of 3 at present.
Levi Strauss & Co. Price and EPS Surprise
Levi Strauss & Co. price-eps-surprise | Levi Strauss & Co. Quote
Valuation Picture of LEVI Stock
From a valuation perspective, Levi Strauss offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 14.44x, which is below the five-year high of 141.93x and the Retail - Apparel and Shoes industry’s average of 17.53x, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the current Value Score of B adds weight to this optimistic view.
The recent market movements show that LEVI’s shares have gained 8.8% in the past six months against the industry's 15.8% decline.
Other Stocks With the Favorable Combination
Here are some more companies, which according to our model, too have the right combination of elements to beat on earnings:
Canada Goose (GOOS - Free Report) currently has an Earnings ESP of +0.25% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is likely to register a bottom-line decline when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for a quarterly loss of 61 cents is wider than a loss of 58 cents seen in the year-ago quarter.
Canada Goose’s top line is expected to rise year over year. The consensus estimate for quarterly revenues is pegged at $67 million, which indicates an improvement of 9.1% from the figure in the prior-year quarter. GOOS has a trailing four-quarter earnings surprise of 57.2%, on average.
Boot Barn (BOOT - Free Report) currently has an Earnings ESP of +3.46% and a Zacks Rank of 3. The company is likely to register a decline in the bottom line when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for quarterly EPS of $1.53 indicates a rise of 27.5% from the year-ago number.
Boot Barn’s top line is expected to increase year over year. The consensus estimate for quarterly revenues is pegged at $489.4 million, which implies growth of 15.6% from the prior-year quarter. BOOT has a trailing four-quarter earnings surprise of 3.4%, on average.
Abercrombie (ANF - Free Report) currently has an Earnings ESP of +0.25% and a Zacks Rank of 3. The company is likely to register a bottom-line decline when it reports second-quarter fiscal 2025 results. The Zacks Consensus Estimate for quarterly EPS of $2.25 indicates a decline of 10% from the year-ago quarter’s level.
Abercrombie’s top line is expected to rise year over year. The consensus estimate for quarterly revenues is pegged at $1.2 billion, which indicates an improvement of 4.1% from the figure in the prior-year quarter. ANF has a trailing four-quarter earnings surprise of 11.2%, on average.