Levi Strauss & Co. ( NYSE: LEVI ) reeled in its full-year revenue and EPS forecasts amid adverse factors in terms of inflation, supply chain disruptions, consumer spending shifts, and currency risks.
For its fiscal third quarter, the San Francisco-based denim manufacturer posted $1.5B in revenue, $80M short of expectations, alongside $0.40 in adjusted diluted earnings per share that edged past analyst estimates. Adjusted gross margin contracted by 60 basis points from the prior year amid inflation impacts, while supply chain problems prompted about $30 to $40M in missed sales, the earnings release reported.
Elsewhere, European sales slumped 19% from the prior year as consumers pulled back on spending. The sizable drop helped to offset a strong recovery in Asia Pacific sales from the prior year.
“Despite a more challenging environment, we delivered solid third quarter results,” CEO Chip Bergh said. “While we expect the macroeconomic backdrop to remain unpredictable over the next few quarters, our strong brands, diversified business model and proven team position us to deliver on our long-term objectives. We have separated ourselves from the competition by making the right moves in challenging times, and this environment is no different. We will operate with discipline and lean into our strengths to further expand our lead for the years to come.”
Despite that confidence, Bergh moved to set “more modest expectations for the fourth quarter” and therefore the full year.
The company now expects net revenue growth of 6.7% to 7.0%, down from a prior expectation of 11 to 13% stated in July. Meanwhile, the full-year forecast for adjusted diluted EPS of $1.44 to $1.49 was trimmed from a prior guide of $1.50 to $1.56. Wall Street had anticipated $1.54.
“The company's outlook assumes no significant worsening of the COVID-19 pandemic, inflationary pressures, supply chain disruptions or further worsening currency impacts,” the release added.
Shares of Levi Strauss ( LEVI ) slid 2.7% shortly before the company’s earnings call began. Dig in the details of the earnings release .
For further details see:
Levi Strauss stock slides as strong dollar, supply chain problems prompt guidance cut