Levi Strauss Shares Decline

(Reuters) – Levi Strauss (NYSE:LEVI)’ shares fell about 7% on Thursday following a weak forecast for holiday-quarter revenue, highlighting the denim maker’s struggles with sluggish demand from retailers grappling with consumer spending.

The company is considering selling its underperforming khaki and chinos brand, Dockers, as apparel makers reassess their product assortments to align with changing customer preferences.

Disappointing segments like wholesale sales to retailers and Dockers impact Levi’s full-year earnings and revenue growth credibility, according to Stifel analyst Jim Duffy.

Dockers’ sales fell 15% in Q3, and wholesale revenue, representing about 56% of total revenue for that period, dropped 6%.

Levi expects fourth-quarter revenue growth in the mid-single-digit percentage range, falling short of analyst estimates of 7.36%.

Despite these challenges, analysts remain optimistic about Levi’s turnaround efforts. Telsey Advisory Group analyst Dana Telsey noted ongoing strength in Levi’s business and the exploration of strategic alternatives for Dockers.

Levi aims to enhance its direct sales through its stores, website, and app, reporting a 10% rise in global direct-to-consumer sales in the reported period, following an 8% increase in the prior quarter.

The company’s shares have risen approximately 27% this year, trading at $19.46 in morning trading.

Levi’s forward price-to-earnings ratio for the next year stands at 14.96, compared to Ralph Lauren’s 16.02 and Abercrombie & Fitch’s 12.64.

TD Cowen analyst Oliver Chen recognizes the need for greater consistency to achieve long-term revenue growth targets, which remains a significant concern for investors.