Levi Strauss & Co (NYSE:LEVI) shares fell nearly 3% in extended trading Thursday after the iconic denim apparel company slashed its full-year sales forecast and fell short of quarterly revenue expectations.
The company posted revenue of $1.51 billion, down slightly from $1.52 billion a year ago and below the $1.54 billion expected by analysts. Adjusted earnings were $0.28 per share, compared to $0.40 last year and Street expectations of $0.27.
Looking ahead, Levi said it now expects full-year revenue to be flat to up 1% year-over-year, down from its previous guidance of 1.5% to 2.5% growth. The company added that adjusted earnings per share are now expected to be on the low end of its previously guided range of $1.10 to $1.20.
These downward revisions come just one quarter removed from when Levi cut its full-year profit outlook as well.
Levi, which also makes the Dockers and Beyond Yoga brands, has been hit by weaker consumer spending at retailers. In particular, Signature by Levi Strauss and Denizen, the company’s value brand jeans, have seen sales decline at Walmart and Target, according to CEO Charles Bergh.
“Clearly, that’s an indication that that value consumer is under pressure,” Bergh said in an interview with CNBC.
Levi has offset this somewhat by prioritizing direct-to-consumer sales on its website. Net revenues from its direct-to-consumer business increased 14% year-over-year and ecommerce revenue jumped 19%.
Overall, direct-to-consumer made up 40% of total net revenue in the period, and Levi has said it plans to increase that to 55% by fiscal 2027.
“In the third quarter, we delivered double-digit growth in our direct-to-consumer business, driven by strong comp-store gains, which helped offset continued softness in the wholesale channel, primarily in the US,” Bergh said in a statement.
“We are focused on the levers within our control and the actions we took in the third quarter are beginning to drive improvements in US wholesale trends.’
Shares of Levi declined nearly 3% after hours to $12.83 after dropping 1.6% during the Thursday session.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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