Levi Strauss faced a setback on Thursday as it revised down its full-year sales forecast, missing Wall Street’s quarterly revenue expectations. The company was affected by declining shopping trends at department stores and major retailers across the US.
This cautionary update comes just three months after Levi Strauss had already reduced its full-year profit outlook. The company now anticipates net revenues to remain flat to a modest 1 per cent increase year-over-year, a significant decrease from the previous projection of 1.5 per cent to 2.5 per cent growth.
In an interview with CNBC, CEO Chip Bergh pointed out that consumers, feeling the pinch of inflation, rising mortgage rates, and gas prices, have curtailed their purchases from retailers carrying Levi’s apparel. Bergh stated, “All the factors affecting the middle-income consumer are impacting our wholesale business.”
For the three-month period ending 27th august, net income was US $ 10 million, compared to US $ 173 million the previous year. Despite observing continued momentum in its direct-to-consumer business and positive trends in its wholesale business at the start of the fiscal fourth quarter, Levi Strauss adopted a conservative approach with its outlook.
Like many other retailers, Levi, which also includes Dockers and Beyond Yoga, struggled against a challenging sales backdrop in the US. The company sells its products both online and in its stores worldwide but also relies on chain retailers like Macy’s, Kohl’s, and Target. These retailers, purchasing Levi’s wholesale items, have experienced weaker discretionary sales.
Bergh noted that Levi’s value-based denim lines, Signature by Levi Strauss and Denizen, especially suffered. Sales of these brands, available at Walmart and Target, plummeted by double digits in the third quarter.
