Levi Strauss stock down 6% on por sales outlook
Levi Strauss & Co. cut its profit outlook drastically after the company reported a steep drop off in wholesale revenues and soft sales in the US, its largest market.
Levi's now expects adjusted earnings per share of $1.10 to $1.20, compared to a previous range of $1.30 to $1.40.
(Video Transcript)
Levi Strauss
Big denim manufacturer Levi Strauss bought shares for more than 6% in extended trade last night after the company reported what was seen as relatively good earnings. But a very difficult outlook for the business. Let's take a look at the figures as we saw them break. Earnings per share were $0.04 adjusted against $0.03 expected, but revenue came in as expected at $1.34 billion.
But it cut its profit outlook drastically after the business reported a steep drop in wholesale revenues and soft sales in the US, its largest market. The outlook, well, it came in at a dollar ten to a dollar 20, compared to a previous range of a dollar 32 to a dollar 40. There were some bright spots, however, in its direct-to-consumer sales and the Chinese market, which was particularly robust.
Levi Strauss shares
But let's look at what's been happening with shares. As it said, it fell in extended trade last night. It's not an all-session stock on the platform, but what I've done is explained where shares are likely to fall at the start of these trades, with a drop of around 6% at 1339. But you can see the difficulties Levi's had. It's seen a big rise in costs; it's seen a big rise in labour and the cost of cotton, which, of course, is one of its biggest raw material costs. And add all this together with a rise in inventories, and the companies have a little bit of a problem, even though there's been a rise in Chinese demand.
This is not enough to offset the slump in US sales. The blue dotted line is the IPO price of $17. When it came to the market in the late summer of 2020. And you can see that it has risen to the record highs that we saw when this stock was on the 4th of May 2021, all up at $30.82. Here we are now trading at 1424.
The stock is expected to open lower at the beginning of today's trade on Wall Street. Two more videos from us here at ITV Join us on Twitter, IG, and com. Instagram and subscribe to our YouTube channel.
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