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Author: Alan LittleDate: 2021-10-08

Levi Strauss (LEVI) supply chain “agility” drives fiscal Q3 beats

Levi Strauss (LEVI) said that its diversified supply chain is now a “competitive advantage” as the clothing company breezed past Wall Street earnings expectations in Q3.

Levi Strauss & Co (LEVI) said that its supply chain is currently a “competitive advantage” after the clothing company eased past Wall Street earnings expectations for fiscal Q3 and its shares jumped 10% in trading in New York on Thursday.

During the three months to 29th August, Levi posted $0.48 earnings per share and $1.5bn revenue versus the $0.37 and $1.48bn analyst consensus.

Levi, known for its fashionable jeans, benefited from a surge in demand for its clothing during the summer with shoppers embracing new denim-based trends centred on looser, more relaxed fits.

Chief executive Chip Bergh also revealed that Levi has been able to steer clear of the supply chain problems that are causing bottlenecks and delays for companies around the world.

This is because Levi has a diversified manufacturing setup with only a small percentage of its output tied to Vietnam.

Bergh added: “We can move product around with a lot of agility. … We’ve been running the business against different scenarios for the last 18 months.”

Levi only lost out on around $10m due to its supply chain in Q3, which is a very small figure when set against the 41% spike in revenue of $1.5bn.

Direct-to-consumer sales were healthy during the quarter, rising 34% compared to a year ago as more people returned to physical stores.

Digital transactions did not drop due to that trend though, which bodes well for Levi, with online sales growing 10% year-over-year and 76% from 2019 levels.

Looking ahead to fiscal Q4, Levi has guided for up to $0.40 adjusted earnings per share, which is in line with expectations, and for a 20% to 21% rise in revenue.

LEVI shares traded up on Thursday with the 10.11% gains by mid-morning setting a new $26.69 price.

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