A pair of selvedge jeans from Levi’s, Louisville, KY.
Luke Schallett | Bloomberg | Getty Images
Levi Strauss On Thursday, the apparel retailer slashed its profit forecast for the year after it reported a sharp drop in wholesale revenue and weak sales in the United States, its largest market.
However, the blue jeans seller saw bright spots in its direct-to-consumer sales and the Chinese market.
Here’s how the company’s fiscal second-quarter results compared with Wall Street expectations, according to a Refinitiv survey of analysts:
- EPS: Adjusted to 4 cents vs. 3 cents expected
- income: $1.34 billion vs $1.34 billion expected
The company’s net loss for the three-month period ended May 28 was $1.6 million, or 0 cents a share, compared with a net profit of $49.7 million, or 12 cents a share, a year earlier. For the quarter, Levi’s reported adjusted EPS of 4 cents.
Sales fell to $1.34 billion, down 9% from $1.47 billion a year earlier.
Halfway through the fiscal year, Levi’s has sharply lowered its full-year profit forecast. Adjusted EPS is now expected to be $1.10 to $1.20, compared with a previous range of $1.30 to $1.40.
Levi also tightened its revenue forecast for the year. The retailer now expects sales to rise between 1.5% and 2.5%, compared with a previous rise of 1.5% to 3%.
Harmit Singh, Levi’s chief financial and growth officer, told CNBC that the gloomy outlook is due to a combination of factors, but it’s largely due to an expected slowdown in U.S. wholesale revenue, which fell 22% in the quarter. %.
The company also plans to cut prices on about half a dozen price-sensitive items, including 502 jeans, and plans to raise taxes. Levi’s effective tax rate for the quarter was 78.4%, compared with 36.1% a year earlier.
“We’re cautious about the outlook for wholesale in the U.S., even though we’re doing pricing moves and everything,” CEO Chip Bergh told CNBC. “Given recent performance, current macro headwinds and consumer dynamics in this market.”