저자: JimCramer—주출연자는MichelleGass이나예측발언은Cramer · 외국인
요약 보기
Levi Strauss 실적은 매출 소폭 하회(환율 영향), organic 성장 5%로 기대 부합, EPS 크게 상회(관세 환급 일부 기여), 연간 실적 가이던스 상향. DTC 미국 부진은 마케팅 실패였고 9월 이후 회복, 중국은 13% 성장. Cramer는 Levi's 주가 반등을 예상하며 소비재 기업 중 과도하게 하락한 종목에 주목하라고 언급.
다듬은 글
What do we think about the just-announced results of Levi Strauss&Co., the iconic denim clothing manufacturer? The company's stock had a great year until the sell-off began two months ago, as it has with most other consumer companies. Everyone thought Levi's would suffer because of high fuel prices , but not all companies are the same.
Today, the company reported a technically mixed quarter, which I thought was quite positive. Levi's slightly missed revenue forecasts, but that was partly due to currency fluctuations. This cannot be influenced. Their organic growth was closer to expectations. On the other hand, they significantly exceeded earnings per share, but part of this was provided by the return of customs duties.
Although Levi's raised its full-year earnings forecast , the increase was less than some had expected, but I still think it's a very good result. There are a lot of nuances here, so let's dig into the details with Michelle Gass, president and CEO of Levi Strauss&Co. To learn more, Ms. Gass, welcome back to Mad Money.
Thank you, Jim. It's nice to be here. So, Michel, I saw a slightly different distribution than what I was used to. Your wholesale business, which is truly excellent, has shown significant growth. Your direct-to- consumer (DTC) sales have n't grown as well. What do you think about these differences and what conclusions can be drawn for the future?
Yes, of course, Jim. As you said earlier, we have reached the upper limit of our forecast. We predicted organic growth at 4-5%, and we achieved 5%. But the quarter turned out to be somewhat atypical. Wholesale sales grew by 6%, international figures were very strong—8% . And I believe this demonstrates the essence of our strategies and the strength of the diversified portfolio we are building.
So, the results in wholesale and international growth offset some weakness in the DTC sector, where growth was only 2%. This affected only a few markets, important markets— Europe and the US. We'll get into the details, Jim, but I will tell you that the team has taken on the challenges and we are already seeing a recovery.
The situation in the USA is positive. Overall, global DTC growth returned to mid- single digits in September, and we expect growth to return to high single digits by the end of the year. So we feel confident. This is not a trend, it's just a moment in time, and as I said, we have already recovered. Okay, this is important.
Did you think that there was something wrong with DDC in the beginning, which was later corrected, and you returned to your previous strength, if not to even better performance than we expected? Yes, no, that's right. So, this was specific to Europe and the US, particularly the DDC segment. If we take Europe, everyone knows that it was very hot this summer, and although we had plenty of shorts, tank tops, and T-shirts, it still hurt business.
Our wholesale business in Europe was very strong. So Europe as a region has worked quite well. They showed a 5% increase, and in DDC, when the temperature dropped and it got cooler, business picked up. So now , since the beginning of the quarter, we have positive results, and we feel great. And in the USA the situation was different.
I would say, Jim, that our campaign, our marketing campaign leading up to the start of the school year, fell short of expectations . Of course. Ahem. Yes, I'll explain this in a little more detail. We thought it was a strong campaign and we promoted our bestsellers in the loose fit category. As loose fit became a big macro trend in denim, but American consumers preferred a low rise, and while we have those products, we just haven't been talking about them loudly enough.
So we changed our approach. In retail, everything depends on the details and the ability to adapt quickly. And when we saw this shift, the team immediately got to work. We have an advantage thanks to the duty refund. We invest, we'll talk about it later, but we reinvest a significant portion back into the consumer to stimulate demand.
We are increasing marketing to focus on the products that the consumer needs now, namely low-rise. We have loose fit, low rise, super low, straight low—any type you want, and it's happening right now. And this has been the reason for the acceleration that we see, as I said, in the US in the DTC segment, which has already turned positive since the beginning of the fourth quarter.
Well, thank you, because if you weren't so frank, I would say I don't understand what's going on, but the fact that you openly admitted that things went wrong at first and then things got better is great. One area where everyone is doing terribly is, frankly, China. And yet, I did n't see the terrible numbers from China.
I saw good ones. Why are you able to show good results in China, while everyone else is struggling? Yes, we have many advantages in China. This quarter, China's performance increased by 13%, and they have been showing success all year. First, I would say that we have a great leader, a great team, and they work effectively.
Secondly, we changed our product strategy, placing a greater emphasis on, as I call it, global icons combined with products adapted for the Chinese consumer. And I would say that the approach was a bit inconsistent before. So now that we've got it right, consumers are responding positively. We are really focusing on the efficiency of our stores: we are displaying products differently, and in some cases, changing locations, moving out of old real estate and opening new prominent locations.
So, as I said, the team is doing a great job. And also, we had, let's say, great success in China and in Asia in general—this is Rosie. We have a phenomenal partnership with this global K-pop star. She has over 90 million followers worldwide, but she's just incredible in Asia. She appeared in these pop-up shops.
Thousands of people came there, we got over 3 billion in media exposure, and it was a huge boost for us across Asia, including China. Of course. Now I want to ask about a division that maybe shouldn't be asked about, but it was good—your yoga brand Beyond Yoga. I know it's very small, and you might say, " Jim, any second spent on this is probably a mistake." But I haven't seen anyone show numbers that meet or exceed expectations, and you did.
Is something happening there? Yes, of course, the Beyond Yoga team is making great progress. Since we're talking about expanding into a lifestyle company, you know, Levi's is not going to move into the activewear segment. This is where Beyond Yoga comes in. And they delivered a strong quarter again.
This is a combination of strengthening our e- commerce. We are building more stores. I don't know, Jim, if you've been to the pop-up store in New York, but things are going really well there. And what's important about their category: yes , it's yoga, but it's so much more, and the categories that are really winning are the lifestyle categories , whether it's travel pants, sweaters, layering, or, say, a new sports gear called Glo Zone.
So the team is doing really well, and, you know, it's a smaller business for us , but it's growing steadily. And, you know, on Wall Street we often apply certain theoretical approaches and pattern recognition. We say that when gas prices go up, we stop buying non- essential goods. I never really understood what non-essential goods were and are jeans such goods, or are they something you wear when you don't have a lot of money?
Do you see any impact or do you associate any impact of fuel prices on clothing? No, our consumer continues to demonstrate resilience. As I said, our problems in the US were related to DTC, and those were precisely our internal problems. On the other hand, our wholesale business in the US showed positive results for the quarter.
So, you know, even when things get tough, you just have to work harder, because they're still going to spend money. You need to be much more relevant and innovative. This is what our teams do. They find ways to truly connect with the consumer. In our world, we also take segmentation seriously. So we have our staple red label, classic Levi's, which are also great value.
I mean quality, durability—I think it's important, and in times like these, it's even more important. In addition, we have our Signature brand from Levi Strauss, which grew 13%. This is big business for us. And many consumers can buy it at Walmart. And, you know, they show very good results. And then, in the premium segment, we have the blue label.
So now we move on to the $200 items. It's a small business for us right now, but it's growing at a double-digit rate. So the main thing is to meet the consumer where they want to be, whether it's, as I said, the blue label, Signature or our main red label, we will be there for them. Okay, well, I'm interested in what happens in the future.
And honestly, given what's already happened, I think people who say, "You know what, I don't like what happened in the first two months of DC TJC," should look at stocks that have fully reflected that period but don't reflect the future upturn, which is what I'm interested in. Michel Gass is the president and CEO of Levi Strauss.
Michelle, thank you so much for coming to the show. Thank you very much, Jim. Good. I'll say it again to everyone : look at Constellation Brands, they initially said things weren't going so well, and then they reported improvements, and the stock went up significantly. I think the same thing will happen here, with Levi Strauss and Michelle Gass.
Mad Money will return after a break. Next: Cramer doesn't think this is Constellation Brands' last chance. He will explain why investors should be confident. Next .
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