Levi Strauss & Co (NYSE:LEVI) stock fell sharply after the renowned denim maker revised its annual profit forecast downward due to increased costs and sluggish wholesale performance in North America.
The company now expects its adjusted profit to range between $1.10 and $1.20 per share for fiscal year 2023, compared to the previously anticipated range of $1.30 to $1.40 per share. Levi's also narrowed its forecast for annual net revenue growth to 1.5% to 2.5%, down from the previous range of 1.5% to 3%.
During its second quarter of 2023, ended May 28, Levi's reported a net loss of $1.6 million, compared to a net income of $49.7 million the previous year. Quarterly revenue fell 9.1% to $1.3 billion, roughly in line with analysts' expectations, according to Refinitiv data.
Despite multiple price increases on its products, Levi's has faced challenges including higher costs, increased promotions, and supply chain issues.
While the company's direct-to-consumer channel experienced a 13% revenue increase in the second quarter, its wholesale channel, which includes retailers like Target and Nordstrom, saw a 22% decline due to tighter inventories. Sales in the Americas dropped by 22%, while sales in Europe fell by 2%.
Shares of Levi’s dropped by 7.2% on Thursday after the bell following the earnings disappointment.
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