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BenzingaEditorial

Levi’s Enduring Appeal Did the Job

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Levi Straus News

Levi Strauss & Co (NYSE: LEVI) saw its shares going up 9% on Tuesday after delivering a surprising profit. There were declines but they were less than anticipated. Pandemic-induced losses were offset by its online business whose revenues surged 52%. As of Tuesday’s market close, shares are down about 22% this year but the stock jumped 13% to $16.65 shortly after the market opened on Wednesday.

Fiscal third quarter results

Revenue fell 27% to $1.06 billion but still exceeded the expectation of $822.2 million, resulting in adjusted earnings per share of 8 cents, topping the forecasted loss of 22 cents expected. Stores were closed during the quarter, and net income tumbled 78%. Levi’s net income fell to $27 million, or 7 cents per share, from $124 million, or 30 cents a share, a year earlier. Moreover, Levi managed to relt less on promotions to move merchandise off shelves. Most importantly, Levi gained market share in women’s apparel category.  This segment has grown from making 20% of the total business in 2015 to 37% today, but the long-term target is to account for 50% of total sales.

Net sales fell 16% in Europe, 29% in America and 42% in Asia. But its digital revenue across the globe, including sales on its own websites as well as its wholesale partners like Amazon (NASDAQ: AMZN), grew 50% year over year. Moreover, online retail accounted for about 24% of third-quarter sales, which is double year-ago levels. Levi.com alone saw its sales skyrocketing 52% and online sales have remained strong even as stores reopen during the pandemic.

Forecasts

Levi expects the strong performance will continue into the holiday quarter, though it expects a drop of 14% to 15% year over year in sales during the period, assuming the pandemic does not worsen. Although there will be no dividend payout in the fourth quarter, payments will resume next year if the positive momentum continues. The denim maker plans to sell increase its Target (NYSE: TGT) presence from 140 existing stores to 500 stores by the fall of 2021, providing both higher- and lower-price products that do not cannibalize one another as they appeal to entirely different customer groups.

Levi is getting into the resale game

The resale market is exploding. ThredUp and GlobalData Retail concluded from their study that this market is expected to rise from $32 billion this year to $51 billion by 2023. Levi aims to capitalize on this opportunity with its own program for worn jeans and jackets while also benefiting its reputation b y making more sustainable choices. This week has also been about Levi’s SecondHand launch. Buyers can now buy pre-owned jeans as well as receive a credit for their used items under the buy-back program, depending on the item’s age, condition and original retail price. Levi has now officially stepped into recommerce as it is the first denim brand of its size to take action and responsibility for the full lifecycle of its garments.

Outlook

This quarter was much better than expected as Levi achieved profitability despite a fall in sales. Levi’s efforts and the tough choices it had to make during the initial stage of the pandemic such as slashing 15% of its global corporate workforce have started to pay off. Although its business is expected to be significantly hurt by COVID-19 related costs weighing on its results, the popularity of Levi’s during the pandemic which mostly benefited athleisure shows the enduring appeal of this brand. The denim leader proved its value.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. 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

BenzingaEditorial

Snap Couldn’t Snap Out of Apple’s Privacy Changes

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On Thursday, Snap Inc (NYSE: SNAP) reported its third quarter earnings which clearly show revenue suffered due to Apple Inc’s (NASDAQ: AAPL) iPhone privacy changes that disrupted the advertising business. Although this was expected, the impact was stronger than anticipated. Stock fell 22% upon the news as the company also warned that global supply chain interruptions and labor shortages are reducing the “short-term appetite to generate additional customer demand through advertising.” Shares of rivals Facebook (NASDAQ: FB) and Twitter were also down approximately 7% in after hours.

Third quarter figures

Adjusted earnings per share amounted to 17 cents, more than double the 8 cents estimated by Refinitiv, but revenue of $1.07 billion fell short of Refinitiv’s forecast of $1.10 billion.

Snap’s community now has 306 million global daily active users (DAUs) as it grew 4% from the figure reported in April and almost 23% from last year’s comparable quarter. It exceeded the StreetAccount estimate of 301.8 million, with average revenue per user (ARPU) being $3.49, slightly below the expected $3.67.

At a somewhat brighter note, net loss narrowed 64% from a loss of $200 million a year ago to $72 million.

Making Snapchat safer

While Facebook and its owned Instagram are under scrutiny on the way they are managing their teenage audience, the company is taking action to ensure a safer experience for its youngest users by working on a set of family safety tools. It is building insights for parents that reportedly won’t compromise privacy or data security. According to the CEO Evan Spiegel, one of the goals of this initiative is to open up a dialogue between parents and their children about their experiences on the app. The main goal is to get into parent’s good graces and protect teens without comprising the privacy of the app’s users.

Fourth quarter guidance

For the undergoing quarter, the company expects to gather DAUs in the range between 316 million and 318 million, which is more optimistic tha the StreetAccount estimate of 311.8 million.

Accounting for headwinds posed by Apple’s privacy changes, supply chain disruptions and labor shortages that are expected to stick around for a while, fourth-quarter revenue is expected to be in the range between $1.16 billion and $1.20 billion, short of the $1.36 billion Refinitiv’s survey of analysts expected. Unfortunately, these changes are taking place when supply chains should be operating at peak capacity and with peak advertising demand driving peak contestation, and therefore peak pricing.

Long-term goal remains intact

In a nutshell, although some degree of business disruption was anticipated due to the Apple’s improved privacy changes that Spiegel himself praised, the impact was greater as it made it more difficult for advertising partners to measure and manage their ad campaigns for iOS. Although the dynamics of these challenges is difficult to predict, the growth of the audience, the community’s adoption of Snap’s new products and the attractiveness to advertisers gives the company confidence to be able to navigate this storm as it continues its path towards its long-term vision.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. 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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BenzingaEditorial

Netflix Is Not Giving Up The Throne

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The streaming giant posted its third quarter results on Thursday, solidly beating earnings and showing it can continue attracting new subscribers. Besides a crowded streaming front, including no other than the entertainment giant The Walt Disney Company (NASDAQ: DIS) itself, Netflix (NASDAQ: NFLX) also needs to compete for users’ attention with TikTok videos, videogames such as Epic Games-owned Fortnite as well as with old-fashioned books.

Quarter figures

The quarter’s subscriber growth of 4.4 million did a great job in topping the 3.84 million Wall Street expected and even its own estimate of 3.5 million as the company rolled out a bunch of content that was delayed due to the pandemic. The streaming pioneer now has a customer base of 222 million customers, out of which 67 million are in the United States.

For the quarter that ended on September 30th, Netflix generated $7.5 billion in revenue and ended with $1.4 billion in profit, slightly exceeding expectations.

Q4 guidance- an uncharted territory

Netflix anticipates to add 8.5 million new customers in the undergoing quarter which is one of the biggest quarterly forecasts in its history. The co-CEO Reed Hasting elaborated that the amount of content for the fourth quarter is something it never had before so the only way through is by feeling with hopes to roll into a great next year as well. As for profitability, the guidance is $365 million on a revenue of $7.7 billion.

A new metric on the horizon

Unlike traditional television, where economics are governed by ratings and cable licensing fees, Netflix doesn’t make more money when viewers watch more hours but when more people sign up. For this reason, it announced it will use new metrics for reporting viewership to match how outside services measure TV viewing and gives proper credit to rewatching. It will report hours viewed rather than the number of accounts that watched. For example, the current measure ranks “Extraction,” on top of the list with 99 million accounts having watched at least two minutes of the title in its first 28 days whereas the new measure would put “Bird Box” with 282 million total hours viewed within the same time frame. In addition, Netflix will also release title metrics more regularly in addition to quarterly earnings reports.

The Squid Game is a game changer

The South Korean series was its biggest series launch ever, topping 111 million viewers globally and beating out “Bridgerton.” Squid Game” will reportedly generate almost $900 million in impact value for the company. This success story shines a light on how much more affordable it is to make TV shows outside the United States with Disney having recently announced that 27 projects will be made in the Asia Pacific region.

Gaming update

Netflix revealed its experiments with gaming are underway as it is testing its games in select countries. Games will be offered under Netflix subscriptions and will not include advertisements or in-app purchases.

The offense

Netflix is also facing a rare public relations nightmare with Dave Chappelle’s comedy special that critics saw it as a hostile invective toward the transgender community rather than the boundary-pushing stand-up routine that Ted Sarandos, the company’s co-chief executive, initially defended. However, he admitted to “screwing up” in his efforts to communicate with employees who were upset over “The Closer,” in which Mr Chappelle made remarks that some viewed as offensive to the transgender community. With the protest held on Wednesday to support the streamer’s trans employees, who began a virtual walkout, it seems Netflix has still to figure out how to navigate such challenges.

What is clear is that Netflix is determined to defend its streaming throne by looking for new ways to keep customers glued to its service such as the upcoming gaming experiment.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. 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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BenzingaEditorial

Chipotle Smashes Estimates Once Again

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On Thursday, Chipotle Mexican Grill Inc (NYSE: CMG) issued its third quarter results, smashing Wall Street’s estimates for both earnings and revenue. Menu price increases helped the burrito chain weather through the storm caused by higher costs on beef and freight, with shares rising 33% this year, resulting in a market value of $51.79 billion.

Third quarter figures

Revenue rose 21.9% to $1.95 billion slightly exceeded the expected $1.94 billion. Same-store sales rose 15.1%, also exceeding 14% that StreetAccount expected. Digital sales that more than tripled a year ago increased by 8.6%. During the quarter, the company opened 41 new restaurants.

Net income for the quarter that ended on September 30th amounted to $204.4 million, or $7.18 per share. As a comparison, during the same quarter last year, it made $80.2 million, or $2.82 per share a year earlier. The food chain successfully weathered cost increases of freight and beef by increasing its own menu prices. It announced the 4% increase back in June as to cover the cost of increasing restaurant workers’ wages to an average of $15 an hour.

Putting a tax benefit, restructuring costs and other items aside, earnings per share become $7.02, also topping $6.32 per share that Refinitiv survey of analysts expected.

The strategy is paying off

In two and a half years, the company’s loyalty program gathered 24.5 million members and according the the CEO Brian Niccol, there’s still a lot of room to grow. Although the company is still facing challenges such the labor crunch that’s hitting the broader industry, its strategies show it is handling it better than its industry peers. There is also the impact of inflation on construction materials, shortages on subcontractor labor and equipment and landlord delivery delays.  Under Niccol, who previously led Yum! Brands Inc (NYSE: YUM)-owned Taco Bell , the company has accelerated adding new menu items through a process it calls stage-gate testing with the aim to drive customer traffic to restuarants and keep the menu from getting bloated.

Fourth quarter guidance

The company is projecting same-store sales growth in the low-to-mid double-digits range. Several uncertainties have been noted as possibly weighing on the business for the foreseeable future, including inflation, staffing pressures and Covid-19. But the CFO Jack Hartung remains confident in the company’s ability to drive restaurant margins higher as average unit volumes increase.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. 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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