Levi Strauss gives upbeat 2023 sales outlook as demand holds up
Reuters
Levi Strauss & Co
Shares of the denim maker jumped more than 6% in extended trading after it also topped fourth-quarter sales and profit expectations and projected an improvement in gross margins for 2023.
The San Francisco-based company is seeing a boost from its direct-to-consumer business, with strong demand for non-denim clothing and women’s apparel helping it offset slumping sales in Europe and an overall decline in wholesale revenue.
However, the company said it expects lower revenues in the first-half of the year.
“We’re thinking about (fiscal 2023) as a tale of two halves, with the first half weaker than the second half,” said Chief Financial and Growth Officer Harmit Singh.
With shoppers now buying more office-friendly and non-denim bottoms such as formal trousers and cargo pants, analysts have flagged uncertainty around denim demand in the near-term.
Nearly 40% of Levi’s 2022 revenue came from categories outside denim bottoms, including chinos, leggings, tops, dresses, footwear and accessories, Chief Executive Chip Bergh
“They seem very bullish on their numbers for the year, but I do have to say that Levi is one of the top brands, their product is very good … and it is a brand that the customer will go back to if they are shopping,” said Jane Hali & Associates analyst Jessica Ramirez
Levi projected net revenues between $6.3 billion and $6.4 billion for fiscal 2023, compared with Refinitiv estimates of $6.27 billion.
It expects full-year adjusted profit between $1.30 and $1.40 per share, in line with analysts’ expectations.
Levi’s fourth-quarter revenue fell 6% to $1.59 billion but edged past estimates of $1.57 billion, while adjusted profit of 34 cents per share topped expectations of 29 cents.
