by Ian Harvey
April 09, 2021
Shares of Levi Strauss LEVI surged more than 9% after hours. The retailer reported fiscal first-quarter earnings and sales that were above Wall Street expectations despite ongoing store closures due to the pandemic. The company also raised guidance for the first half of the year and said it was raising its dividend.
“Stock Options Made Easy Members” Already Up 80% - More To Come Today!
With the growth story to continue another trade maybe considered.
The Actual Recommended Trade.....
** OPTION TRADE: Buy LEVI APR 16 2021 24.000 CALLS at approximately $0.90.
The Profit Explained…..
“Stock Options Made Easy members” entered a trade on Levi Strauss LEVI Monday, April 05, 2021 for $0.90.
The earnings report came out Thursday, after the market closed, beating the consensus and also raising guidance for the first half of the year.
The will set up our options trade to soar after the market opens today. This trade is already up 80% before the earnings, so where will it finally get to today?
Why The Trade Recommendation On Levi Strauss LEVI?
Jeanswear specialist Levi Strauss & Co. (NYSE: LEVI) will be announcing its earnings results after the market closes on Thursday, April 8th. Analysts expect the company to announce earnings of $0.24 per share for the quarter.
Levi Strauss LEVI is a fashion icon, famous for its jeans. The company returned to the public markets in 2019 and its stock soared 140% in the past year to crush Nike, Lululemon, and others. The run has helped lift it above its IPO levels, with it now up around 8% since its debut in March 2019.
Levi Strauss LEVI has continued its strong performance in 2021, up 20% to top the S&P 500’s 6% climb. And at around $23.96 a share, the stock is not only low-priced, it’s trading at a 7% discount to its mid-March highs.
Levi Strauss LEVI owns others brands and Wall Street has been pleased with its initiatives in a changing retail and fashion landscape. Many investors see an opportunity for even bigger gains ahead.
Levi Strauss LEVI is a global fashion brand, with various offerings for men, women, and kids found in chain retailers, department stores, online sites, and a global footprint of approximately 3,100 retail stores and shop-in-shops. Beyond its namesake clothing brand, Levi owns Dockers, Denizen, and others. The company pulled in $4.45 billion in 2020 sales, which marked a 23% downturn, driven by coronavirus setbacks.
Luckily, Levi’s sales improved as economies reopened, with its Q4 revenue down just 12% vs. its 62% decline in the second quarter. Like many retailers, the company spent much of the last year improving its digital businesses, with its fourth quarter e-commerce revenue up 38% to account for 23% of total sales, up from 15% in the year-ago period.
Despite the setbacks, Levi Strauss LEVI has topped our adjusted earnings estimates in the trailing four quarters, including huge beats in Q3 and Q4. The iconic jeans maker is also focused on diversifying beyond denim pants, especially amid changing fashion habits and the rise of Lululemon and athleisure. “In 2015, our tops business represented 11% of our total business. In 2020, it was 21% of revenues,” CEO Chip Bergh said on the company’s Q4 earnings call.
“Another 16% of our 2020 revenues were from other categories that are not denim bottoms such as accessories, footwear and chinos. Over the next decade, as we drive outsized growth in tops and these other categories, we expect half our revenues will come from products that are not denim bottoms.”
Levi’s push to expand its reach and diversify comes as malls and traditional department stores such as Macy’s struggle in the Amazon and digital shopping age. This includes a beefed-up partnership with Target that features its recently-launched lifestyle collection that ranges from home goods to and pet supplies.
The bullish thesis is backed by its small but quickly growing e-commerce platform. Levi Strauss is also aiming to diversify into complementary categories outside its core denim focus. Progress in these two areas might remove some of the sting from weak sales, which are expected to fall by 17% this quarter compared with last quarter's 12% slump.
Four of the five brokerage recommendations for Levi are “Strong Buys,” with the other at a “Buy.”
The Actual Earnings Report for Levi Strauss.....
Levi Strauss came out with quarterly earnings of $0.34 per share, beating the Consensus Estimate of $0.24 per share. This compares to earnings of $0.40 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 41.67%. A quarter ago, it was expected that this jeans maker would post earnings of $0.14 per share when it actually produced earnings of $0.20, delivering a surprise of 42.86%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Looking Ahead for Levi Strauss…..
For the first half of 2021, Levi Strauss raised its net sales guidance to a growth between 24% and 25% compared to sales from the first half of 2020 and its net adjusted earnings estimate to between 41 cents and 42 cents. The guidance implies adjusted earnings of between 7 and 8 cents for the second quarter, topping the consensus estimate of 5 cents
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!