Levi reports strong denim sales but considers selling Dockers due to underperformance

From CNBC: 2024-10-02 16:39:42

Levi Strauss & Co is experiencing strong denim sales but is considering selling off its Dockers brand due to underperformance. Despite a 5% increase in Levi’s brand sales, overall revenue fell short of expectations, leading to a 7% drop in stock price. Earnings per share were 33 cents, exceeding the expected 31 cents, with revenue at $1.52 billion versus an expected $1.55 billion.

Levi reported a net income of $20.7 million, up from $9.6 million last year, with sales at $1.52 billion. The company reaffirmed its full-year adjusted earnings per share guidance of $1.17 to $1.27, adjusting revenue growth to 1%, below analyst expectations of 2.3%.

Dockers sales dropped 15% to $73.7 million while Beyond Yoga saw a 19% increase to $32.2 million. Levi’s plans to sell Dockers, expecting improved margins and reducing revenue volatility. The company’s direct selling strategy is increasing profitability through higher margins and customer data collection, with a plan to reach 55% direct sales.

Levi’s Europe business posted higher sales at $406.6 million, beating estimates, while sales in the Americas and Asia were lower. Levi’s is facing challenges in China with macro headwinds and execution issues. The Americas experienced setbacks due to a cybersecurity breach at a wholesale partner in Mexico, impacting sales.

Levi’s gross margin increased by 4.4 percentage points, attributed to direct-selling strategy and lower costs. The company plans to focus on selling directly to consumers through its stores and websites to increase profitability. With Bank of America leading the sale process for Dockers, Levi’s aims to maximize value and independence for both brands.



Read more at CNBC:: Levi (LEVI) earnings Q3 2024