Levi Strauss & Co. ( NYSE: LEVI ) stock slid before the bell on Wednesday as Citi forecast weaker denim demand into 2023.
Citi analyst Paul Lejuez downgraded Levi Strauss ( LEVI ) stock to Neutral from Buy as a key takeaway from the ICR Exchange was “how abruptly the trend in bottoms shifted away from denim during the 2022 back to school season” and weak holiday sales in the category. He cited commentary from both Abercrombie & Fitch ( ANF ) and American Eagle Outfitters ( AEO ) as indicative of this trend.
“While LEVI is a strong brand with good global prospects long-term, in the near to medium term we expect a challenging US backdrop characterized by weaker denim trends to pressure results,” Lejuez wrote on Wednesday. “The Levi brand (85% of company sales) derives 60-65% of its sales from denim and they have tough comparisons in 1H23, so with deteriorating trends in the denim market broadly, we believe results are likely to be pressured in 2023.”
Shares of the San Francisco-based jeans manufacturer fell 2.23% in premarket trading on Wednesday.
Read more on Goldman Sachs’ concerns on the company’s margins into 2023 .
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Levi’s stock slips as Citi calls out denim demand slowdown