What happened
Levi Strauss & Co. (LEVI 2.32%) exceeded analysts' earnings estimates last night, and its stock is defying the market downturn and zipping higher on Thursday afternoon. As of 2:50 p.m. ET, shares of the blue jeans specialist were up a solid 9%.
Heading into Q4, Wall Street forecasters had predicted Levi would earn $0.40 per share on $1.68 billion in sales, and that's almost exactly what Levi delivered. In fact, the company beat estimates by just $0.01, earning $0.41 per share for the quarter.
Image source: Getty Images.
So what
Sales for the fourth quarter of 2021 grew 22% year over year, with high-margin direct-to-consumer sales rising 25% and lower-margin wholesale sales up 20%. Gross profit margin on those sales increased to 57.8%, and on the bottom line, Levi earned $0.37 per share -- more than twice the GAAP earnings recorded a year ago.
Pro forma earnings -- the ones analysts focus on, but not calculated according to generally accepted accounting principles (GAAP) -- more than doubled year over year to the aforementioned $0.41.
For the full year, Levi boasted a 29% increase in sales to $5.8 billion, and turned 2020's GAAP loss into a $1.35-per-share profit in 2021.
Now what
And the good news should continue into 2022, albeit at a slower pace. Providing new guidance for the current fiscal year, Levi said investors can expect to see sales grow 11%-13% to somewhere between $6.4 billion and $6.5 billion by year-end. Pro forma profits will range from $1.50 to $1.56 per share, or about 4% better than last year.
Levi did not say what it expects its GAAP profits to be, but management did reassure that it's "well positioned for long-term, sustainable growth," with "strong brand equity" that is "driving pricing power," GAAP earnings should also be pretty strong this year so long as inflation rates and supply chains cooperate.
