Levi Strauss said his revenue rose more than expected as the holiday season approached, even as he navigated supply chain issues that wiped out profits from Black Friday sales.
The shift to casual wear has spurred demand for Levi’s jeans, including newer styles with a looser fit, as consumers work from home during the pandemic.
The San Francisco-based company also received a boost last quarter as more shoppers returned to stores. It reported a 28% increase in net revenue from company-operated stores compared to the same period a year ago.
Overall, net revenue jumped 22% to $1.7 billion in the three months to the end of November, beating analyst forecasts of $1.68 billion and the company’s own outlook. which sales would increase by up to 21%.
Levi said its revenue took a $50 million hit due to supply chain constraints in the quarter. This offset a 3% increase in Black Friday sales and the company’s acquisition of the Beyond Yoga brand.
Harmit Singh, chief financial officer, said staffing issues as well as supply chain bottlenecks were preventing Levi from meeting all of the demand for its products. Sales have not suffered much from the price increases, he said.
“Demand exceeds supply,” Singh said in an interview, adding that Levi maintained pricing power during a period of high cost inflation fueled by wages, raw materials and store rent.
Levi predicted net revenue will improve 11-13% in fiscal 2022 to between $6.4 billion and $6.5 billion, above analyst forecasts of 6, $37 billion. He expects adjusted earnings of $1.50 to $1.56 per share, compared to Wall Street’s estimate of $1.53.
The shares rose 1.9% in after-hours trading on Wednesday.