The company’s shares fell after a disappointing earnings report.
On Tuesday, Levi Strauss released its second-quarter earnings report and the results weren’t quite what investors were expecting. The company’s shares fell 6% after investors learned it had fallen short on profit expectation.
During the second quarter, Levi Strauss earned 7 cents per share in comparison to earnings of 19 cents per share a year earlier.
So, what’s happening?
The company blamed the drop on its March IPO, saying that the $29 million it paid in costs cut into its bottom line.
Details on the Earnings Report
Levi Strauss recently went public after being out of the market for more than 30 years.
When the company filed for its IPO in February, it stated that it intended to move away from jeans and onto footwear and outerwear. In many ways, the company was successful in doing this during the first half of the year. It successfully increased brand awareness across its men’s and women’s lines.
Levi Strauss has also been working hard to increase its presence in international markets. This strategy paid off and the company’s net revenue increased across the U.S., Europe, and Asia. Levi Strauss also added 78 new stores and grew its online presence substantially.
The company didn’t adjust its fiscal guidance for the remainder of the year. However, because of when the company’s fiscal year ends, its 2019 sales won’t include Black Friday, which will cause a hit to its earnings.
What’s Next for Levi Strauss?
Overall, the company’s earnings report wasn’t terrible. But investor disappointment was probably compounded by the fact that little has happened for the stock since its March IPO.
During its initial public offering, the company’s shares jumped 30% above its $17 asking price but the stock has mostly fallen flat since. This isn’t that surprising since the jeans market has taken a hit in recent years as consumer preference has shifted more toward athletic wear.
To its credit, Levi Strauss is a well-known brand with stable growth prospects. But there’s nothing really that exciting or innovative about the company, either — so the company may see slow and steady growth in the coming years.
