On Thursday, Levi Strauss’ stock plummeted following a tepid outlook for holiday-quarter sales, underlining the firm’s weak demand from retailers and sluggish customer spending.
The California-based firm’s stock fell by -7.69% to $19.44 apiece. However, it recovered by 0.77% to $19.59 per stock in the after-hours session.
Furthermore, the company is exploring the possibility of selling its struggling Dockers brand, which focuses on khakis and chinos. Apparel makers are re-evaluating their product lines to address shifting customer preferences.
Meanwhile, analysts pointed out that underperforming areas like wholesale sales and the Dockers brand are dragging down Levi’s full-year earnings and weakening its ability to drive revenue growth.
According to reports, Dockers’ sales in the third quarter have eased by -15.00% while wholesale revenue, accounting for over 56.00% of total revenue, saw a -6.00% decline.
Moreover, Levi noted that it anticipates Q4 revenue to surge in the mid-single-digit percentage range, compared to forecasts of a 7.36% growth.
The denim maker aims to increase sales by focusing on direct channels, including its stores, website, and application.
On the other hand, despite the recent challenges, the firm’s global sales in its direct-to-consumer channel jumped by 10.00%, following an 8.00% climb in the previous quarter.
Dockers Brand May Put on Sale, Says Levi CEO
Levi is considering a sale on its underperforming Dockers brand and expects fourth-quarter revenue below estimates.
Meanwhile, the firm seeks to increase the growth of its iconic brand, and its Beyond Yoga has revealed a strategic review of Dockers, which has been battered by warning spending in Europe and the US.
The denim maker’s CEO, Michelle Gass, stated that they are narrowing their focus to realize the full potential of the company’s brand and strengthen Beyond Yoga. Hence, they are exploring strategic options for the global Dockers business.
Furthermore, as part of its cost-cutting efforts, which included layoffs, Levi has already exited underperforming segments like the Denizen brand and its footwear category in certain regions.