Levi Strauss & Co. (LEVI) has laid the groundwork to execute on a big new financial goal put forth by its CFO Harmit Singh.
Get back to pre-COVID 19 annual sales (or in this case, 2019 levels) by the second half of 2021. And in doing so, bring back the dividend after doing away with it in the current quarter.
“I believe the pandemic is actually raising the casualization of the workplace,” Singh told Yahoo Finance’s The First Trade about his mission fresh off Levi’s third quarter earnings release Tuesday evening. “Casualization and the focus on clothing will benefit us.”
To that end, Levi’s has just put some new stakes in the ground in an effort to reach Singh’s goal.
Target announced Tuesday it will expand its offerings of Levi’s Red Tab label jeans to more than 500 locations by next fall from 140 currently. Meanwhile, Levi’s CEO Chip Bergh and Singh disclosed to analysts on the earnings call it’s now testing premium-priced jeans, jackets and shirts at 11 flagship Dick’s Sporting Goods locations and online. Dick’s marks a new partner for Levi’s.
The company has also taken the wraps off Levi’s Secondhand, allowing shoppers to buy pre-owned jeans and jackets. Shoppers could also turn in their used clothing for credit toward new purchases. The apparel resale market is valued at about $28 billion today, but ThredUP believes it could reach $64 billion by 2024 as shoppers focus more on sustainability.
That said, Levi’s does have a lot of clawing back to do on the top line as the pandemic continues to weigh on store shopping trends globally.
Levi’s third quarter sales fell 27% year-over-year to $1.06 billion. Sales and operating profits fell in Levi’s three main geographic segments: Americas, Europe and Asia. Levi’s did return to profitability in the quarter, however, powered by cost cuts and a 50% surge in global e-commerce sales.
For the fourth quarter, Levi’s sees sales falling 14% to 15%. Adjusted earnings are expected to be between 14 cents and 16 cents a share.
Shares of Levi’s rose 6% in Wednesday afternoon trading.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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