What Happened?

Shares of denim clothing company Levi's (NYSE: LEVI) jumped 5.2% in the morning session after data from Adobe Analytics, which tracks retail transactions, revealed that Shoppers spent a record $10.8 billion online on Black Friday (2024), representing more than a 10% growth compared to the previous year, and more than double what consumers spent in 2017. This is a bullish 'read-through' for retailers and aligns with some of the positive sentiments and holiday spending trends observed by some of the companies that have reported this earnings season.

After the initial pop the shares cooled down to $18.04, up 3.3% from previous close.

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What The Market Is Telling Us

Levi’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 8 months ago when the stock gained 18.2% on the news that the company reported first-quarter results that blew past analysts' EPS expectations, driven by growth in its Direct-to-Consumer (DTC) sales in all business segments. 

As a reminder, DTC revenue has higher margins than wholesale revenue because the company can charge higher prices. In addition, management noted that nearly half of its revenue (48%) was generated from its DTC business (direct-to-consumer), which means less reliance on partners to drive the top line and potentially more flexibility, which could extend to how its products are priced. 

Furthermore, the company stated its revenue would have been flat year on year excluding its Russia business and divestiture of Denizen. Levi's also declared a dividend of $0.12 per share ($48 million total). Lastly, the company's full-year revenue and EPS guidance were in line with Wall Street's projections. Overall, this was a favorable quarter for Levi's.

Levi's is up 10.9% since the beginning of the year, but at $18.04 per share, it is still trading 25.4% below its 52-week high of $24.17 from June 2024. Investors who bought $1,000 worth of Levi’s shares 5 years ago would now be looking at an investment worth $1,084.

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