Levi’s also announced that it would reduce approximately 15% of its global workforce, which would impact approximately 700 jobs, with the goal of reducing costs during the coronavirus pandemic. He said the move is expected to generate annualized savings of $ 100 million for Levi’s.
Its shares initially fell in after-hours trading but have recently risen by less than 1%.
“Although we are starting to see green shoots, we must continue to be cautious,” said CEO Chip Bergh in a note to company employees, which was obtained by CNBC. “There could be a second wave,” cases of Covid-19 and the resulting store closings, he added.
Bergh’s comments come as cases have increased rapidly in the United States in recent weeks, prompting some states and local governments to slow reopening or reimpose measures to curb the spread of the coronavirus. Overall drops in retail store traffic have picked up again in the past two weeks, according to data from ShopperTrak.
Today, when approximately 90% of Levi’s stores have reopened worldwide, traffic and sales are still down from a year ago, said Bergh. A full recovery “will likely take some time,” he said.
Here’s how Levi’s did during the quarter ended May 24:
- Adjusted loss per share: 48 cents
- Revenue: $ 498 million
The San Francisco-based company reported a net loss of $ 364 million, or 91 cents a share, compared to a net profit of $ 29 million, or a profit of 7 cents a share, a year ago.
Excluding one-time charges, Levi’s lost 48 cents per share.
The loss is mainly due to $ 242 million in restructuring and inventory costs related to the pandemic disruptions, the company said.
Revenues fell 62% to $ 498 million from $ 1.31 billion a year ago.
Analysts were calling on Levi’s to report an adjusted loss of 49 cents a share on revenue of $ 486 million, according to Refinitiv data.
The company said the losses were partially offset by its e-commerce activity, which increased 25% in the second quarter, representing 15% of total net revenues during the period, compared to only 5% a year earlier.
However, sales in the Americas region decreased by 59% overall. They fell 68% in Europe and 61% in Asia.
“Unlike a number of our peers … we gained the weight in a quarter,” Bergh told CNBC in a telephone interview.
Now, with approximately 90% of stores in operation, approximately 40% report growth in sales from last year, in some cases exceeding internal company expectations, he said in the report. ‘interview.
But Levi’s has plans in place in case he needs to close a number of these doors. Apple took the lead and closed dozens of stores in states like Florida and Texas for the second time, with Covid cases still on the rise in some hot spots. According to Bergh, Levi’s has about 40 sites in the United States that it currently monitors closely, checking them every Monday, Wednesday, and Friday. “There are several doors coming closer,” he said.
Inventories ended the second quarter up 10%, said Levi’s.
According to Bergh, much of Levi’s merchandise is “evergreen,” which means the company can put it away and it will always be in fashion next season.
Levi’s said it ended the quarter with total liquidity of approximately $ 2 billion, with $ 448 million still available on the company’s revolving credit facility.
The company does not offer prospects for 2020 at the moment.
Levi’s shares are down about 27% from a year ago. The company has a market capitalization of $ 5.5 billion.