Levi Shares Tumble as Full-Year Guidance Disappoints

Yahoo

29-01-2025

(Bloomberg) -- Levi Strauss & Co.'s shares fell after the clothing company delivered weaker than expected full-year guidance, forecasting a revenue decline that follows a year of mixed earnings reports.
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The San Francisco-based retailer is expecting revenue to fall 1% to 2% in fiscal 2025, missing analyst expectations for growth.
The shares fell 7.7% in postmarket trading in New York. The company's stock has gained 9.1% over the last 12 months, trailing the New York Stock Exchange Composite Index, which has risen 17%.
The company said it expects net revenue to fall in 2025 because of the weakness of foreign currencies, one fewer week in the fiscal year, an exit from the footwear business and the discontinuation of its Denizen brand.
'We recognize there continues to be a lot of uncertainty related to the macro environment, potential tariffs, changes in the tax code as well as worsening foreign exchange,' the company's chief financial and growth officer, Harmit Singh, said on a call with analysts.
Levi is still considering a sale of its Dockers brand, Chief Executive Officer Michelle Gass said.
For the fourth quarter, Levi reported revenue of $1.8 billion, ahead of analyst estimates, with growth in both its wholesale and direct-to-consumer sector. Sales in the Americas, Europe and Asia were all stronger than anticipated in the quarter. The positive result follows a couple of disappointing quarters during fiscal 2024 that sunk shares.
'We're really making this pivot from being a bottoms business to a head to toe denim lifestyle business,' Gass said in an interview with Bloomberg News. She added on the call with analysts that categories outside of denim pants, including shirts, skirts and dresses, now represent about 40% of the business and are growing.
Consumer companies are faced with shoppers that are squeezed by years of high inflation and focused on essentials like groceries. A number of retailers announced holiday sales earlier this month, with some names like Lululemon finding a bright spot, while others, such as Macy's Inc., offering downbeat guidance.
Levi is introducing a new metric — organic net revenue growth — which is anticipated to be up 3.5% to 4.5% in the fiscal year. The new measure, which Levi's says better captures the company's 'underlying growth,' excludes items such as foreign exchange, divested businesses and acquisitions.
(Adds context in fourth, fifth and sixth paragraph. A previous version corrected the spelling of the Levi CEO's last name.)
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