For his Executive Decision segment of Wednesday's "Mad Money" program from outside the New York Stock Exchange, Jim Cramer sat down with Chip Bergh, CEO of Levi Strauss & Co. (LEVI) , the denim and apparel maker that had a hot initial public offering (IPO) in late March but has cooled since.
Bergh said Levi had a great quarter, one that included broad growth in many of the company's products, brands, categories, channels and geographies around the globe. While U.S. wholesale orders fell 2%, Bergh said if you remove the beleaguered Sears from the mix, wholesale orders were actually up 2% for the quarter.
Bergh added that Levi guided for mid to high single-digit revenue growth this year, so after posting 10% growth in the first half it now is being cautious for the rest of the year. When asked what's driving Levi's growth, Bergh noted factors including collaboration with certain media as well as the launch of new customized products. He said customers can now customize their jeans with laser etching and have them shipped within a week.
Levi is also making strides in sustainability, Bergh said, by eliminating chemicals and adding to its products new fibers such as "cottonized hemp" that require fewer resources to grow. Let's check out the charts and indicators to see how they might grow.
In this daily bar chart of LEVI, below, we can see that the broader movement of the stock has been lower. With only four months of price history to analyze we selected shorter moving averages. LEVI is trading below the declining 20- and 50-day moving average lines. The daily On-Balance-Volume (OBV) line shows weakness, which signals more aggressive selling. The 12-day price momentum study shows a few days of slowing momentum, so we might see prices hold their July lows.
Bottom line strategy: LEVI has gotten off to a weak start as a publicly traded company, so we will need to see a base develop before being attracted to the long side.