Levi Strauss cuts profit forecast

11 July 2023, Mumbai

Levi Strauss lowers profit forecast, and faces sales decline and higher costs. Q2 net revenues drop 9%, the largest decline since Q1 2021.

To boost sales, Levi's plans price reductions on select wholesale products. Consumers reduce discretionary spending due to rising living costs.

Projections

2023 profit forecast revised to $1.10-$1.20 per share, down from $1.30-$1.40. Adjusted gross margin expected to contract by 90 basis points.

Inventory backlog creates supply chain challenges. Direct-to-consumer revenue was up 13% in Q2, while the wholesale channel sees a 22% decline.

Prediction

Michael Ashley Schulman predicts a continuing decline in wholesale revenues, necessitating promotions, and price cuts, impacting margins and revenue growth. Levi Strauss reports a Q2 net loss of $1.6 million, compared to $49.7 million net income last year.

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