What's going on?
Shares of American denim dealer Levi Strauss flared up 5% on Wednesday after the company unveiled an upward-trending set of quarterly results – its first since returning to the stock market last month.
What does this mean?
So much for shrink-to-fit. Levi’s sales were 11% higher than a year ago, ignoring international currency shifts – and growth was particularly good in direct sales, as opposed to those made via department stores or online boutiques, which take a (boot)cut. Analysts are still trying Levi’s new stock on for size, meaning there were sparse earnings estimates against which to measure the results. Nevertheless, individual investor sentiment was high, according to TipRanks. They were probably encouraged to see Levi’s continuing to benefit from resurgent denim fashions, even as other outfitters struggle for traction – and its plans for 100 new stores this year also fit well.
Why should I care?
For markets: The importance of having earnings.
In the three weeks since it went public, Levi’s stock has risen over 30% in value. A good first set of public results never goes amiss, reinforcing as it does investors’ belief in a company’s plans. Like a good pair of jeans, meanwhile, a disappointing debut set of numbers just doesn’t wash. Not-so-lossless audio streamer Spotify, for example, posted weaker-than-expected earnings shortly after listing last year – and its shares suffered. If the likes of Lyft, Pinterest, and Uber don’t come out the gates firing on all cylinders, there’s a risk that their brand-new shares end up languishing (Lyft’s already are).
Zooming out: Another turnaround complete.
It took 34 years of private ownership for Levi’s to reinvent itself; the UK’s biggest supermarket may have managed it in just four. Tesco hailed a job more or less well done on Wednesday as the grocer bagged a bumper annual profit and raised its dividend, to investors’ delight. And, perhaps, to yours – as one of Britain’s biggest companies, anyone owning a UK stock portfolio or pension stands to gain (tweet this).