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Levi Strauss Stock Falls After Earnings Miss, Guidance Cut

Levi Strauss & Co (NYSE: LEVI) shares fell in after-hours trading on Thursday following the company's second-quarter earnings report.


The company reported revenue of $1.337 billion, missing analyst expectations of $1.34 billion. Adjusted earnings per share came in at 4 cents, beating estimates of 3 cents per share.

Levi said inventories increased 18% year-over-year on a dollar basis. Although gross margin ticked higher to 58.7%, operating margin fell 4.5% to 0.7% as gross margin expansion was offset by SG&A deleverage on lower net revenues and higher marketing and DTC expenses.


The company also cut its full-year 2023 net revenue growth guidance to 1.5% to 2.5% from 1.5% to 3%. Earnings guidance was also cut to $1.10 to $1.20 per share from $1.29 per share.


The sell-off in Levi shares comes as investors are concerned about the impact of rising inflation and supply chain disruptions on consumer spending. Levi is not the only company that has seen its stock price fall after reporting disappointing earnings. Starbucks (NASDAQ: SBUX) and Target (NYSE: TGT) both saw their shares fall sharply after reporting earnings misses last week.


It remains to be seen how Levi Strauss will fare in the second half of the year. However, the company's decision to cut guidance suggests that it is not immune to the headwinds facing the retail industry.


Key Takeaways

  • Levi Strauss & Co reported revenue of $1.337 billion, missing analyst expectations.

  • Adjusted earnings per share came in at 4 cents, beating estimates of 3 cents per share.

  • The company also cut its full-year 2023 net revenue growth guidance to 1.5% to 2.5% from 1.5% to 3%.

  • Earnings guidance was also cut to $1.10 to $1.20 per share from $1.29 per share.

  • The sell-off in Levi shares comes as investors are concerned about the impact of rising inflation and supply chain disruptions on consumer spending.

What's Next?

Levi Strauss will hold a conference call to discuss these results at 5 p.m. ET. Investors will be looking for more information on how the company plans to navigate the current economic challenges.


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