Levi Strauss & Co., lowered its guidance for the full year, citing weakness in its US wholesale business and increasingly price-sensitive shoppers.
The store also revealed quarterly sales that met estimates but were down 9 per cent from a year earlier, highlighting a general slowdown in garment spending in the face of an unsteady economic climate.
In the three months ending 28th May, revenue from direct sales increased 13 per cent while income from wholesalers decreased 22 per cent, indicating greater difficulties at big-box retailers than on the Levi’s website and stores.
“Results were very much driven by a very strong direct to consumer business and also because of continued strength in our international business,” Levi’s Chief Executive Officer Chip Bergh said.
According to a statement from the company, sales in Asia increased 18 per cent as a result of the region’s robust expansion, which included China. Sales were also declining in the Americas and Europe.
Due to improved inventory control, price hikes, reduced air freight costs, and favourable currency exchange, the merchant also reported an improvement in gross margin. In spite of this,
Levi’s plans to lower pricing on a few items later this year, which could hurt margins in the second half, according to Chief Financial Officer Harmit Singh.
The results indicate that other brands may be under pressure from consumers’ more cautious shopping behaviour. Levi’s is the first of the major US garment retailers to publish second-quarter earnings. In the latter half of August, businesses like Gap Inc., and Macy’s Inc., will announce their financial results.
