Levi’s shares fall as sales weakness sparks downbeat outlook
Bloomberg
Levi Strauss & Co
The denim brand is taking a more “cautious approach” to its projections for the current quarter, according to a statement Thursday. It now expects full-year earnings per share, excluding some items, to be on the low end of its previously stated $1.10 to $1.20 range, and Levi scaled back its revenue outlook as well.
Revenue in the quarter ended Aug. 27 was just short of estimates, with weakness in Europe and North America offsetting growth in Latin America and Asia.
The shares fell 6.1% at 4:16 p.m. in late trading in New York. This year through Thursday’s close, the stock has declined 15%.
“The middle-income consumer and below are definitely being impacted, especially here in the US, but that’s also true in parts of Europe,” Chief Executive Officer Chip Bergh
As the first of the major US apparel retailers to report during the current earnings cycle, Levi’s earnings will be closely watched — and they may fuel expectations for further downbeat performances. Apparel companies such as Gap
The fact that Levi, which has met or exceeded revenue expectations in most of its recent quarters, remains cautious even after cutting its annual guidance in July hints at a bleaker outlook for the industry. The company has cited increasingly price-sensitive shoppers — particularly those who shop at lower-priced wholesale partners like Walmart Inc.
Direct-to-consumer revenue increased 14% in the company’s fiscal third quarter, while wholesale revenue fell 8%. Sales in the Americas dipped 5%, while Asia jumped 12%, reflecting strong growth in China.
The denim brand said it’s accelerating the transition to a more direct-to-consumer model, and is creating “an initiative to review our operating model and cost structure that should drive agility and material cost savings beginning in 2024.”
