Shares of Levi Strauss surge 18% on Q1 2024 earnings

Actions of Levi Strauss surged 18% on Thursday after the retailer raised its full-year profit forecast and reported better-than-expected holiday profits.

Levi’s reported its first-quarter results late Wednesday and said it expects fiscal 2024 adjusted earnings per share to be between $1.17 and $1.27, up from to a previous range of $1.15 to $1.25.

Analysts were expecting a forecast of $1.21 per share, according to LSEG, formerly Refinitiv.

As the retailer faces a slowdown in discretionary spending, it is focusing on what it can control: cutting costs and becoming more efficient to improve its bottom line.

In January, Levi’s launched an initiative designed to accelerate profitable growth and reduce costs. As part of this plan, Levi’s has cut approximately 12% of its global workforce. It also shed its lower-margin Denizen business and relied less on aggressive discounts to boost sales.

The company is also seeing record sales volumes online and in its own stores rather than in department stores like Macy’s And Kohl’swhich have a lower margin.

“The benefits of our Project Fuel initiative are just beginning to manifest, which will continue to improve the agility and efficiency of our business,” Chief Financial Officer Harmit Singh said on a call with analysts. “We will also continue to generate positive free cash flow through inventory and working capital management.”

During the quarter, fewer promotions as well as lower product costs helped increase Levi’s gross margin by 2.4 percentage points to 58.2%, compared to 55.8% a year earlier.