Levi Strauss (NYSE:LEVI), which went public in March, is kicking off 2019 on a high note. After the market closed on Tuesday, the world's largest jeans company reported strong earnings on double-digit constant currency revenue growth. As of 6:26 p.m. EDT on Tuesday, the stock is trading nearly 5% higher during after-hours trading -- and that's on top of a 2.7% gain during the trading day as investors looked forward to the earnings release.
Here's a closer look at the results that have investors looking up.
Levi reported first-quarter revenue of $1.435 billion, up 7% from $1.344 billion in the year-ago quarter. Constant-currency revenue, however, climbed 11% year over year, marking the company's sixth straight quarter of double-digit constant-currency revenue growth.
Profitability was also a strong point for the quarter. Net income was $147 million, up from a net loss in the year-ago quarter, which included a negative one-time impact from the 2017 Tax Cuts and Jobs Act. Earnings per share came in at $0.37, up from a $0.05 loss in the year-ago quarter. When adjusted to for one-time charges, net income surged 81% year over year and adjusted earnings before interest and taxes rose 14% year over year. Management credited the improvement in profitability to higher revenue and margin expansion.
Not a bad way to kick off 2019, especially considering it's the company's first quarterly report since it went public in March.
"Our strategies are working..."
What's particularly notable about Levi's first quarter is how broad-based this growth was. Growth was driven by "all three regions and all channels, demonstrating that our strategies are working and our investments are paying off," said Levi CEO Chip Bergh.
In Levi's Americas region, which makes up about half of the company's sales, revenue and operating income rose 9% and 11% year over year, respectively. Growth, management said, was driven by wholesale and direct-to-consumer channels. Operating income also benefited from lower advertising costs but was partially offset by an increase in direct-to-consumer and distribution costs.
Revenue in Europe, Levi's second largest market, increased 3% year over year. Operating income in the market increased 6% over the same timeframe. This market was particularly impacted by currency headwinds, as revenue increased 10% year-over-year on a constant-currency basis. Like Levi's Americas segment, Growth in Europe aided by direct-to-consumer and wholesale channels.
Revenue in Asia increased 8% year over year (14% in constant currency) as operating income rose 6%. Revenue growth in the market was driven by "strong performance across traditional wholesale, franchisee and direct-to-consumer channels," management said. Operating income growth benefited from higher revenue.
For the full year, Levi said it expected revenue to grow at a rate in the mid-single digits compared to 2018's revenue.