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Denim Giant Wrestling With Wholesale Manages to Slightly Exceed Analyst Expectations

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Levi Straus News

In September, Levi Strauss and Co. (NYSE:LEVI) gained 12.7% as the stock managed to recover from its August drop due to US-China trade tensions. The 166-year-old denim-apparel began offering its shares to the public in March after being private for 34 years. Unfortunately, its profit dropped 4.1% drop in the third-quarter profits as the denim giant wrestles with a weak in the U.S. But the company did manage to report slightly better than expected earnings, causing its stock to go up 2% in after-hours trading on Tuesday.

Third Quarter Earnings Report

Earnings for the third quarter were $124.5 million, whereas they were $129.58 million in the same period one year ago. But the company managed to slightly beat Wall Street’s expectations. And revenue did increase from $1.39 billion to $1.45 billion. Moreover, the San Francisco-based company did manage to offset the 3% decline in North America by its online business growth, achieving 9% growth in direct-to-consumer net revenues. In fact, net revenues increased 14% in Europe and 9% in Asia. But decline in wholesale definitely remains as a persisting challenge due to competitors.

Concerns

Besides Chinese tariffs, the American wholesale segment is struggling but is luckily partially offset by growth in direct-to-consumer sales. Management was actively working to mitigate the impact of these blows and its earnings do show slow progress. In its second quarter, the company managed to achieve 5% growth despite the lower growth from the wholesale channel and third quarter results show further progress. Strong sales overseas and higher e-commerce sales are what made it happen.

Competitors

Let’s face it, the denim space is crowded. In May, VF Corp (NYSE: VFC) spun off its Levi competing jeanswear brands Wrangler, Lee, and Rock & Republic into a newly public company called Kontoor Brands. American Eagle Outfiters Inc (NYSE:AEO) already claims the most share of the jeans market among for 15- to 25-year-olds and ranks second in all jeans brands. They even recently launched a curvy style of jeans for women with a smaller waist and bigger hips. Abercombie & Fitch (NYSE:ANF) did the same, and even Madewell Inc who is preparing to go public did so earlier this year, along with expanding its size range to 24, online. And let’s not forget that Diesel USA, the NY based unit of Italian Diesel SpA filed for bankruptcy in March due to blaming mounting losses, a sales plunge, expensive leases and cyber fraud.

Then there’s Cavlin Klein at PVH Corp (NYSE:PVH). CK revenues declined 6% year over year to $873 million, but this also includes a total net reduction of nearly 2% from the winding down of PVH Corp’s women’s jeanswear (imagine that) wholesale business in the United States and even Canada, and of closing of the Calvin Klein 205 X39 NYC brand. And there’s Carlos Ortega’s Pepe Jeans which is surely the biggest success of venture capital in Spanish fashion that has shown it is an equivalent rival to Levi Strauss. Along with changing its capital structure, the group has internationalized over the past ten years and evolved its portfolio with brands like Esprit. With offices throughout Europe and even in India, its jewel, Pepe Jeans became a Spanish name with many international surnames and one of the main denim groups in the world, going strong both in Europe and India. However, the bad performance in the last two fiscal years, led the company to a restructuration process and in May 2019, the company decided to cut expenses and is trying to renegotiate its debt as its 250 million euros loan expires in June 2021. So, everyone is struggling.

Outlook

The diversifying strategy is working out for Levi but it takes time. Consumer spending is expected to increase in the jeans segment, so Levi’s should see rising demand for its iconic product. Despite the trade wars, investors do see better days ahead for the iconic jeans brand. Additionally, the direct-to-consumer business, including company-owned stores and e-commerce, should continue growing and possibly in double-digits, which can, just like now, offset the weakness from the wholesale business. In the short term, investors will surely monitor the wholesale performance, because the stock is likely to react to how the company is handling that headwind. But Levi Strauss is definitely going strong!

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Disney’s Stock Hits Its New All-Time High With Even Roku Benefiting Its Disney+ Momentum

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Disney News

Shares of Disney (NYSE:DIS) were in breakout mode after reports surfaced about momentum in its Disney+ program. According to Apptopia, the momentum is nearing to 1 million subscribers per day. If true, expectations may still not be high enough for Disney+. November was surely quite a month for Disney as the iconic powerhouse couldn’t have asked for a better start of its streaming service debut! And there is never a dull moment nor a dull month when it comes to the House of Mouse.

Disney+ signups exceed expectations

The biggest new streaming service of 2019, Disney+, debuted on Nov. 12 and despite some initial difficulties on the technical front, it topped 10 million sign-ups on its very first day, free trials included. As a result of Apptopia’s reports suggesting stronger than even expected demand, its shares hit a new all-time-high last Tuesday.

December dates

Disney is about to make quite a bit of fireworks before Christmas. December 3, Disney is scheduled to add another special jewel to its vault: One Day at Disney. This special documentary follows 75 Disney cast members around the globe, during their typical day. Enabling its employees to tell their stories and giving meaning to their tasks is both a perfect HR and PR strategy to both elevate employees and enchant the audience. And it can surely further increase the appeal of the media giant. Next, on December 5th, Disneyland in California and Disney World in Florida are in for a high-tech and immersive game-changing addition. Although Disney World is somewhat better off, Disneyland has been struggling with year-over-year declines in attendance. Well, on Thursday, Star Wars addition will be welcoming visitors at Disney World so it will hopefully raise the bar as it will also join Disneyland next month. Otherwise, entry to Mickey’s world will only get more expensive. In other words, Star Wars: Rise of the Resistance cannot afford to fail visitors. And last but not least, and also Star Wars, The Rise of Skywalker premieres on December 20. Although no movie can please everyone, there are strong expectations to set box-office records for the franchise. And it needs to keep the audience’s interest for the next Starts Wars trilogy which is expected in 2022. And it could even affect Disney + since the company’s unique eco-system has shown a hit often sets everything else in motion.

The competitive landscape is getting more and more intense- but Roku triumphs!

As a consequence of Disney’s fame, Netflix Inc (NASDAQ:NFLX) is losing its loyal customers, but also due to raising prices for the second time since 2017. And there is also Apple’s (NASDAQ:AAPL) TV+ who just debuted as well and Amazon.com Inc’s (NASDAQ:AMZN) service bundle. Not to forget, AT&T Inc (NYSE:T) will launch its HBO Max in May next year and the telecom giant expects 50 million subscribers during the first five years, which are also bound to take a toll on Netflix. Netflix seems to be forced to drop its pricing or risk losing a lot of subscribers. But, the question of content is the one thing ‘money can’t buy’ and the one category in which Disney is the ultimate winner. But there’s the streaming pioneer Roku (NASDAQ:ROKU) which overcame fears that intense competition would dent its unique business model. Despite losing more than a third of its value when Apple announced its aggressive pricing strategy, it turned out that all these additions actually helped Roku, just like its management predicted. And Disney’s soaring demand also helped Roku grow. The strong demand for its app was an ‘unintended’ benefit making Roku the unintended beneficiary as Disney+ service was available to stream across Roku’s infrastructure of devices and ecosystems, so it was a win-win. Data shows that over the past 13 days that downloads of Roku apps jumped almost 30% in comparison to the previous 13-days period. And this is only a small addition comparing to the impressive growth Roku exhibited this year as it grew 54% in the first nine months of 2019 comparing to the same period last year. Its platform revenue grew at an even more impressive rate of 81% and active subscriber base expanded 36% year over year in the third quarter, reaching 32.3 million.

Outlook

Disney+ momentum is showing impressive results, but Disney has a lot of fronts to compete on. The House of Mouse is on a quest to defeat Netflix as the emperor of streaming as the company made a goal to achieve 60 million and 90 million subscribers by 2024. And despite some initial technical glitches that Disney says were due to heavy demand, it’s doing rather well considering it signed on 10 million subscribers within the first 24 hours of Disney+’ existence, but there’s no autopilot in this competitive landscape.

Meanwhile, Roku has shown it benefits from all this competition, and Disney+ was another plus for Roku, whose stock has gained more than 400% this year. And it seems that Roku’s business model is by far the fiercest one on the market, not to say the ‘bullet-proof’ unbeatable one as it’s going strong against headwinds and even benefiting from its so-called competitors!

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

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BenzingaEditorial

Salesforce Might Have Quite a Few Surprises Up Its Sleeve

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Sales Force News

Salesforce.com Inc (NYSE:CRM) is set to report its third quarter financial results for the fiscal 2020 after the closing bell on Tuesday, December 3. There are solid fundamental indicators but its stock has struggled to keep up with the market. Its shares did go upward 18% this year but on the other side, they lagged behind the software industry which exhibited a 41% increase. But it seems that Salesforce has more than a few value-adding surprises up its sleeve which is why it expects to double its revenues by 2024.

Dreamforce Investor Day 2019

At this year’s conference, Salesforce CEO Marc Benioff stood in front of a screen that displayed major tech industry players around Salesforce: Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon.com Inc’s AWS (NASDAQ:AMZN), Google (NASDAQ:GOOG), International Business Machines Corporation (NYSE:IBM), Hewlett Packard Enterprises Company (NYSE:HPE), Cisco Systems Inc (NASDAQ:CSCO), Dell (NYSE:DELL) and Alibaba Group Limited (NYSE:BABA). Benioff explained that Salesforce goal not to create boundaries but to work in a community as it partnered with all the major companies. And Salesforce is showing it can be unifying centre between and across all these technologies!

Competitors

Salesforce has already played the multi-cloud game. Last week, it announced that its Marketing Cloud will make use of Microsoft’s Azure. This was quite a surprise considering the two companies are fierce CRM competitors! In July, the company made a deal with Alibaba to extend its services in China. Back in 2017, also at Dreamforce Investor Day, the company announced a partnership with Google Cloud, as it named as its preferred cloud provider for international expansion. Back in 2016, it made Amazon Web Services as its preferred infrastructure vendor but the 4th year contract is nearing its end date, so the company is playing it safe to be in the multi-cloud business regardless of its renewal. And it developed Trailhead Go for Apple’s iPhones and iPads, so it’s pretty much everywhere.

Fiscal year results

This year the company is expected to generate $17 billion in revenue for its whole fiscal year. Moreover, it expects its revenue to be in the range of $34 billion and $35 billion by 2024, which is an impressive growth rate of about 20% annually. But management announced that the acquisition of MuleSoft was finally starting to come together. But the consequence of all those acquisitions is that after accounting for expenses, the company not generating as much profit, compared to its market peers. But the last time the CRM provider issued quarter earnings was in August with $0.66 EPS, beating the Zacks’ consensus estimate of $0.09, net margin of 6.45%, a return on equity of 7.26%, with revenue amounting to $4 billion, also exceeding analysts’ expectations of $3.96 billion.

The company is pushing its Customer 360 as a platform that is able to bring all the clouds together as this is what customers want: a simple solution which can bear it all. Customer 360 promises to be ‘a single source of truth’ for customer data, no matter where the data resides, and that is no easy task.

Outlook

The projections that Salesforce shared were definitely encouraging. The 26% and 25% revenue growth rates in fiscal 2019 and 2018, respectively, are a proof of the company’s ability to deliver on its new target. But to drive this revenue growth, the company has made a series of acquisitions that weighted on its margins. The company also has stakes in other companies like Dropbox (NASDAQ:DBX) through which it expanded its reach in the tech industry. So overall, it is no surprise that analyst estimates are in line with Salesforce’s new 2024 predictions.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Guess Is Far From Being a Fashionable Stock But It At Least Reported a Profit

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Guess News

Guess Inc (NYSE:GES) released its earnings report after the market closed on Tuesday, November 26th. The shares of Guess’, Inc. have decreased 8 percent this year alone. But after reporting a loss in the comparable quarter last year, the Los Angeles-based company just reported a net income of $12.4 million resulting in 18 cents per share. Shares were slightly up, 1.15 percent to be exact, after third quarter EPS exceeded even the highest analyst estimate.

Third quarter

Revenue amounted to $615.9 million in the period, increasing 1.7% but missing estimates as analysts expected $620 million. Adjusted earnings increased from 13 cents to 22 cents a share. The company operates directly via 1174 stores in America, Europe and Asia as of November 2. Revenues of these segment revenues changed as follows comparing to last year: Americas Retail dropped 5%, while Americas Wholesale climbed 7%. Europe also increased 9% remaining as the company’s bright spot but Asia dropped 8% in US dollars.

The company recorded adjusted net earnings of 14.9 million dollars, which is a 41.2 percent increase from the comparable quarter of the previous fiscal year.

Overall, the clothing company expects full-year unadjusted earnings of $1.20-$1.25 per share and adjusted earnings in the range of $1.31-$1.36 per share. Consolidated net revenues are expected to increase 2.7-3% in fiscal 2020.

Challenged industry

Tariffs placed on almost 90% of Chinese clothing and textile imports by the Trump administration have been posing a significant challenge for apparel stocks throughout the year. But savvy industry players continue to win over shoppers by refining their marketing strategies, forming strategic alliances, and enhancing their digital footprint. Apparel companies with international exposure are also finding opportunities in unsaturated markets like Asia and Europe to boost sales growth.

The whole sector is struggling- but some manage to remain at the forefront

Some of these fashion apparel companies that have taken proactive steps to ensure that they remain at the industry’s forefront is the $7.73 billion New York-based Ralph Lauren Corporation (NYSE:RL) present in America, Europe, and Asia. It owns well-known brands including Polo Ralph Lauren, Lauren Ralph Lauren, Chaps, and Club Monaco. To attract younger buyers, the firm has boosted its marketing investment by 18% in fiscal 2019 compared with last year and plans to increase that budget to 5% of total sales. Recently, the company has worked with social media-savvy celebrities that helped sell its products. The fashion retailer’s shares dropped roughly 37% between May and August, but price has rallied 24% from its August low and the stock continues to show increased momentum. So, Ralph Laurent’s strategy is starting to paying off as it gains attractive attention from investors.

Outlook

Guess’, Inc. is an apparel giant that markets and licenses lifestyle collections of apparel and accessories for men, women, and children. Its iconic fashion brands such as Guess, Marciano, and G by Guess are sold through wholesale channels, retail outlets, and online. Growth efforts in the company’s brightest spot, Europe, include optimizing distribution networks and improving efficiency in sourcing and product development. Management is pleased with the results that show operating earnings and earnings per share for the period above the high-end of expectations while raising the low end of the guidance for the full year. But Guess’ management has more tweaking work to do on its agenda in order to engage customers of today and tomorrow. Such initiatives, if effective, will surely help to offset the increasing expenses and weakening macroeconomic effects.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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