UPDATE 1-Levi Strauss lowers annual profit forecast on rising costs

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UPDATE 1-Levi Strauss lowers annual profit forecast on rising costs

Oct 6 Reuters -- Levi Strauss Co lowered its full-year profit forecast on Thursday, as decades-year high inflation hits consumer spending and a strengthening U.S. dollar adds to worries about higher costs.

The company's shares fell by around 4% in extended trading after the company missed third-quarter revenue estimates.

Consumers are shifting their focus away from higher-priced products and clothes to essentials due to rising inflation, which affects Levi's and other apparel makers.

Jessica Ram rez, analyst at Jane Hali and Associates, said that consumers would be more concerned with where they spend their dollars going into the holiday season, because of the fact that inflation is something consumers are concerned with.

The jeans maker, which has been battling supply chain disruptions since the pandemic began, has been raising prices of its denims to fight rising costs because of the Russia-Ukraine war.

Levi's said continued supply chain disruptions in the United States resulted in missed sales of around $30 million to $40 million in the reported quarter.

The owners of the Dockers and Denizen brands, like other U.S. companies such as Nike and Coca-Cola Co, have flagged global currency headwinds.

Levi's gross margin was 56.9%, down 60 basis points compared to a year ago due to the rapidly strengthening dollar and higher product costs.

The company expects full-year 2022 adjusted profit of $1.44 to $1.49 per share, compared with its previous forecast of $1.50 and $1.56.

Levi's expects to see full-year net revenue grow between 6.7% and 7.0%, representing 11.5% to 12% net revenue growth on a constant-currency basis. The jeans maker predicted a net revenue growth of 11% to 13%.

The company earned 40 cents per share in the third quarter, above the analysts' estimate of 37 cents, according to Refinitiv data.