Levi Strauss & Co., lowered its full-year profit forecast owing to declining demand and a strengthening US dollar, adding to the concerns, and sending shares down by 6 per cent in extended trading.
With decades of high inflation, consumers are shifting their focus away from high-priced products and apparel to everyday products, which is also impacting Levi’s profits. The company is more cautious about doing business in Europe and US as consumers in the region face much higher inflation and higher energy costs, as well as consumers in the US are also having quite a bit of trouble with inflation and thoughts of recession, said the CEO Charles Bergh and analyst Jessica Ramirez respectively. They also added that people will be more concerned about where they spend their money this holiday season.
Levi’s adjusted gross margin was 56.9 per cent, down 60 basis points from a year ago, due to the rapidly rising dollar and higher product costs.
The jeans maker, which has faced supply chain disruptions since the pandemic began, now worsened by the Russia-Ukraine war, has raised prices on its denim to combat rising costs.
Levi’s expects full-year net sales growth of 6.7 per cent to 7.0 per cent or 11.5 per cent to 12 per cent at constant exchange rates. Previously, the company had forecast net sales growth of 11 per cent to 13 per cent. In 2022, the company now expects adjusted earnings of US $ 1.44 to US $ 1.49 per share, compared to the previous US $ 1.50 to US $ 1.56.
