DENIM maker Levi Strauss & Co narrowed its full-year revenue outlook to the bottom end of its previous range, fuelling concern that demand for the company’s apparel is stagnating.
Net revenue is expected to grow about 1 per cent in the company’s current fiscal year, compared with a previous range of 1 to 3 per cent. Sales in the company’s fiscal third quarter, which ended Aug 25, fell just short of the average analyst estimate, and Levi’s Americas division posted a revenue decline.
The shares fell 8 per cent at 4.11 pm in extended New York trading. The stock has gained 27 per cent this year to Wednesday’s (Oct 2) close, outpacing the advance of the S&P Total Market Index over the same period.
Levi is making a push to generate more sales through its own channels. While the company is making progress on that front, its wholesale business is deteriorating rapidly, with a decline of 6 per cent in the latest quarter from a year earlier. The company wants to use its own stores, website and app for sales as shoppers increasingly move away from the department stores that have traditionally been crucial for big apparel brands.
The company is also reviewing options for its Dockers brand, “which could include a potential sale or other strategic transaction”, and has hired Bank of America as a financial adviser in the process. The brand’s sales declined 15 per cent to US$73.7 million in the latest quarter.
Chief executive officer Michelle Gass said the company’s namesake brand is gaining ground, and touted “another great quarter of strength” for the company’s direct-to-consumer segment. That division, which includes Levi’s own website and stores, posted 10 per cent growth.
The San Francisco-based company is looking to spark buzz by partnering with Beyonce. The pop star gave the brand some unexpected publicity earlier this year with a song titled Levii’s Jeans on her latest album. BLOOMBERG
