2023-04-06 16:21:04 ET
Levi Strauss ( NYSE: LEVI ) shares fell 16.03% on Thursday, a record one-day decline for the jeans manufacturer.
The San Francisco-based company notched a beat on top and bottom lines for its fiscal first quarter. However, margins contracted 380 basis points year over year, coming in 1.1% lighter than analysts had anticipated.
“The deliberate actions that we took to reduce inventories in the US…coupled with a more promotional environment resulted in greater-than-expected pressure on gross margin in the short term, but the inventory level sets us up in a stronger position as we move through the year,” CEO Chip Bergh told analysts.
Still, management remained cautious on the outlook for the rest of the year amid still-elevated inventory levels and shaky macroeconomic circumstances.
“Our teams also made significant progress reducing inventory levels, putting us in a stronger position as we move through the balance of the year,” CFO Harmit Singh said. “We are reaffirming our annual revenue and EPS guidance reflecting a cautious outlook on the macro-environment though we remain excited about the momentum in our DTC and international business.”
The reaffirmed forecast includes the expectation of net revenues between $6.3B and $6.4B and adjusted diluted EPS of between $1.30 to $1.40 for the full year. Analysts had anticipated $1.33 in earnings per share and $6.31B in sales.
The sharp decline post-earnings has pushed the stock into negative territory year to date.
Read the earnings call transcript .
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Why did Levi Strauss stock sag on Thursday? Margin contraction, cautious outlook