What's In The Cards For Levi Strauss This Earnings Season? Analyst Sees 4.8% Revenue Growth With Margin Strength

Telsey Advisory Group analyst Dana Telsey reiterated the Outperform rating on Levi Strauss & Co LEVI with an unchanged price target of $16.

The company will post the fourth quarter results on January 25, 2024.

For the quarter, the analyst maintains estimates and continues to look for the fourth quarter EPS of $0.44 vs. $0.34 last year. 

Telsey remains encouraged by continued strength in the DTC business as well as Asia, helping offset ongoing pressure in the wholesale channel in both North America and Europe.

On the top line, the analyst projects net revenue growth of 4.8% year over year to $1.665 billion, up from last year’s result of $1.589 billion.

Within the top line, the analyst’s growth forecast assumes 4.0% growth in the Americas, 2.0% growth in Europe, a 10.0% increase in Asia, and 8.0% growth in the Other Brands segment.

According to the analyst, while considerable progress in the U.S. wholesale channel is not expected in the near term, the company did call out improving trends following strategic actions taken last quarter. 

However, given a still uncertain macro environment and choppy consumer spending trends, management took a more cautious view of the balance of the year, leading to the slightly lower topline outlook and expectations for earnings to come in towards the low-end of the prior range. 

Below the top line, the analyst estimates over 100 bps of gross margin expansion YoY to 57.0%.

Additionally, the analyst looks for SG&A expenses to leverage over 200 bps YoY to 44.8%.

The analyst anticipates a fourth-quarter operating margin of 12.2%, up 320 bps from last year’s 9.0% margin.

Price Action: LEVI shares are trading higher by 1.10% to $15.68 on the last check Friday.

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