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Strong Full Year Forecast By Levi Over Rebound In Apparel Demand


Strong Full Year Forecast By Levi Over Rebound In Apparel Demand
The demand for its jeans, tops, and jackets saw rebound that was faster than expected over all of its market which prompted Levi Strauss & Co to forecast a strong full-year profit. The announcement was made after the company comfortably beat estimates for quarterly earnings for its latest completed quarter.
The company also increased dividend for its third quarter which propped up its shares by 3 per cent. 
Demand and sales of loose fitting jeans and street clothes offered at Levi as well as those offered by its peers American Eagle and Abercrombie & Fitch were boosted by customers who engaged in refreshing their wardrobes during the quarter after hunkering at homes for months because of lockdown and other restrictions imposed to prevent the spread of the Covid-19 pandemic all across it markets. 
"About 35% of consumers in the U.S. have changed waist sizes. And some of it is up and some of it is down, but either way, it creates another reason for people to go out and update their wardrobe," the company’s Chief Executive Officer Charles Bergh said on an earnings call.
The decision of the company to collaborate with a range of brand, including those with Valentino, as well as its push to sell directly sell to customers have also proven to be beneficial for Levi. These strategic measures have boosted the company’s adjusted gross margin by 670 basis points to 58.2 per cent for the second quarter.
The company which is globally known for its Signature and Levi's 501 jeans, said that its margins were also boosted by lower expenditures on promotional activities, a rise in prices of its products and savings made on sourcing of raw materials.
The company also forecast its per-share profit for the fiscal year of 2021 to be between $1.29 and $1.33 which was well over the estimates of $1.15, said the Denizen and Dockers brands' owner.
In the second quarter ended May 30, the company reported a more than doubling of its net revenue to $1.28 billion which also beat estimates of of $1.21 billion according to Refinitiv IBES.
Excluding items, Levi earned 23 cents per share, compared to analysts’ estimates of 9 cents.
During the latest completed quarter, there was a 75 per cent growth in its revenues generated form sale through its digital channels as customers have shifted to online shopping and settled to the ease of getting products delivered at their doorsteps.
There would be more investments made by the company at its distribution centres as well as in its program that allows customers to simply pick products from stores after ordering online which would help the company to improve its digital business, Levi said.