World-famous denim and apparel brand, Levi’s, may have perfectly tailored their IPO in the first few months of public offering but it seems like the company is starting to become worn down as earnings and profitability are beginning to suffer post-IPO.
Levi’s (LEVI) reported Tuesday that its profit during the second quarter of 2019 fell 63% from the same period a year ago. They are pinning the fall down to the elevated costs of filing for an IPO, including the costly underwriting fees and sending its stock down 6% during after-hours trading as the company continually misses Wall Street estimates. Heading into Tuesday, Levi’s stock had climbed 9% over the past three months.
“Our performance in China was positive, yet remains far from its potential,” CEO Chip Bergh said on a call with analysts Tuesday. “There’s still a lot of heavy lifting to do.”
Despite the apparent loss the 501 jeans brains are currently facing, Levi’s sales during its previous quarter grew 5% compared with a year prior, including 9% in Europe and 6% in Asia. It believes it has a huge growth opportunity in China, which accounts for 20% of the global apparel market — but only 3% of Levi’s revenue.
“We have significant opportunity to grow by expanding beyond our core business,” the company said in a regulatory filing in February. Levi’s wants to “develop leading positions in categories outside of men’s bottoms.”
Levi’s IPO in March is possibly one of the best in 2019. The company has seen more than 30% surge in its stocks following its listing in the New York Stock Exchange on the first-day trading. The denim company was able to raise $623 million from the stock sale as it priced the initial public offering at $17 a share, above its expected price range. At an early trading price of $22.97 a share, the 166-year old company is valued at about $8.9 billion.