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(Bloomberg) – Levi Strauss & Co. lost ground at the end of the fiscal year, as earnings in the second quarter were weakened by higher advertising spending, currency-related inconvenience and persistent costs at its IPO.
The denim maker released Tuesday a profit of 7 cents per share in the second quarter, missing analysts' estimates. Its earnings were affected by expenses of $ 29 million related to the company's initial public offering, among other higher costs.
Key ideas
"I will not worry about the one-time cost of the IPO," Chief Executive Officer Chip Bergh said in an interview after the results were released. "It's a one-off success in the short term. We are committed for the long term. Levi is working to strengthen its retail network and online sales, and said its direct-to-consumer sales business grew 9% last quarter, largely as a result of these efforts. But this growth comes at a cost, with higher investment costs. Although revenues exceeded expectations, this was not enough for investors, who sent the shares up to 7.6%. Levi continued its efforts in international markets and sales increased in Europe, Asia and the Americas in the last quarter. It has slightly raised its guidance for fiscal year 2019 with respect to net revenue growth, to be in the upper end of the five-year range. He also said that the constant currency adjusted EBIT margins would be in the range of 10 basis points, up from a previous slightly flaccid forecast.
Market reaction
Levi shares fell to $ 21.87 at the end of the session. The stock has risen 39% since the IPO until the close of Tuesday.
Have more
For financial details, click here. For the company statement, click here.
To contact the reporter about this story: Jordyn Holman in New York at [email protected]
To contact the editors responsible for this story: Anne Riley Moffat at [email protected], Lisa Wolfson
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