Levi Strauss Clocks 6% Topline Growth In Q1 Aided By DTC Segment; Margin Contracts Due To Discounts

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Levi Strauss & Co (NYSE:LEVI) reported first-quarter FY23 revenue growth of 6% year-over-year to $1.69 billion, +9% on a constant-currency basis, beating the consensus of $1.62 billion.
DTC net revenues increased 12% Y/Y, driven by broad-based growth in both company-operated stores and e-commerce across all segments. DTC revenue comprised 42% of total sales.
Wholesale net revenues grew 2% Y/Y, driven by solid growth in Asia, Canada, and the U.S.
Adjusted EPS of $0.34 beat the consensus of $0.32.
Adjusted gross margin was 55.8%, a contraction of 360 basis points from Q1 FY22 mainly due to product discounts. Adjusted EBIT margin declined by 390 bps to 11%.
Adjusted EBITDA for the quarter was $223.7 million, down by 18.9% Y/Y.
Levi Strauss' cash and cash equivalents stood at $321.8 million. Total inventories increased 33% Y/Y on a dollar basis and 21% Y/Y on a unit basis. Net debt was $833.8 million.
Levi Strauss used $(271.7) million in adjusted free cash flow.
The company's dividend of $0.12 per share is payable in cash on May 18, 2023, to the record holders on May 4, 2023.
The company had $680 million remaining under its current share repurchase authorization, which has no expiration date.
"Our first quarter results reflect the strength of our brands and the progress we are making against our strategic priorities," CEO Chip Bergh said. "We delivered strong growth in our international business and record-breaking revenue performance in our direct-to-consumer channel."
Outlook: Levi Strauss reiterates FY23 revenue of $6.3 billion - $6.4 billion, up by 1.5% - 3% Y/Y (consensus $6.31 billion).
It maintains FY23 adjusted EPS of $1.30 - $1.40 (consensus $1.33).
Price Action: LEVI shares are trading lower by 3.83% at $17.34 in premarket on the last check Thursday.
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Levi Strauss Clocks 6% Topline Growth In Q1 Aided By DTC Segment; Margin Contracts Due To Discounts

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