Levi Strauss Cuts Full-Year Sales Forecast as Department Store Sales Weaken

Levi Strauss, the renowned denim retailer, has revised its full-year sales forecast downward as it faces challenges in the U.S. retail market. The company reported lower-than-expected quarterly revenue, leading to a more cautious outlook for the remainder of the year. Levi’s CEO, Chip Bergh, attributed the weaker sales to a decline in shopping trends at department stores and big-box retailers across the country.

Levi Strauss now expects its net revenues to be flat to up 1% year-over-year, compared to the previously projected growth range of 1.5% to 2.5%. The company also anticipates adjusted earnings per share to be on the lower end of the previously shared range. Bergh highlighted that middle-income consumers, affected by inflation, rising mortgage rates, and gas prices, have been purchasing fewer items from retailers that carry Levi’s apparel.

In the fiscal third quarter, Levi Strauss reported net income of $10 million, or 2 cents per share, compared to $173 million, or 43 cents per share, in the same period last year. Adjusted earnings per share stood at 28 cents. While sales remained relatively steady at $1.52 billion, Levi’s value-based denim lines, such as Signature by Levi Strauss and Denizen, experienced double-digit declines in sales.

Despite these challenges, Levi Strauss has seen growth in its direct-to-consumer business, with a 14% increase in net revenues compared to the previous year. E-commerce revenue also surged by 19% year over year, with double-digit growth across all of the company’s brands. Levi Strauss aims to drive 55% of its total net revenues through direct-to-consumer channels by fiscal 2027.

Wholesale net revenue, on the other hand, dropped by 8% year-over-year, as sales gains in Asia and Latin America were not enough to offset declines in North America and Europe. Bergh mentioned that unseasonably warm weather in the U.S. and Europe likely contributed to the weaker wholesale trends. Levi Strauss’s own stores offer a wider range of clothing options, allowing the company to adapt to customer trends and weather conditions.

To stimulate sales, Levi Strauss recently reduced prices on select items, targeting more price-sensitive customers. The company remains “cautiously optimistic” that new styles and the upcoming holiday season will encourage customers to make purchases.

Shares of Levi Strauss have experienced a decline of approximately 14% this year, underperforming the broader market. The company’s stock closed at $13.21 on Thursday, down nearly 2%.

As Levi Strauss navigates the evolving retail landscape, it continues to focus on strengthening its direct-to-consumer business and adapting to changing consumer preferences.