Key points:

  • The company has revised its full-year outlook, lowering expected revenue growth and earnings per share.
  • Revenue came in below forecasts, primarily due to a decline in Dockers brand sales.
  • The company is taking steps to transform its business, focusing on core products and optimizing its brand portfolio.

Levi Strauss & Co. announced on Wednesday a downward revision of its annual forecast after third-quarter sales results fell short of expectations. The denim manufacturer also mentioned it is considering potential strategic options for its Dockers brand, including a possible sale, due to its underperformance.

Levi Strauss report

Levi Strauss & Co. reported adjusted earnings for the third quarter that slightly exceeded Wall Street analysts’ expectations. However, revenue came in below forecasts, largely due to a 15% decline in Dockers brand sales compared to the same period last year. Levi reported adjusted earnings for the third fiscal quarter of $0.33 per diluted share on revenue of $1.52 billion, compared to Wall Street forecasts of $0.31 per share on $1.55 billion in revenue.

In response, the company announced it has begun a strategic review of the Dockers brand, including the possibility of selling it. Despite some deviations from the initial forecasts, Levi has adjusted its full-year expectations for earnings per share and revenue growth.

Looking ahead, the company now expects revenue growth of 1%, compared to the previous forecast of 1–3%. Levi expects adjusted diluted earnings per share to be $1.22, which is the midpoint of the previously forecasted range of $1.17 to $1.27 but falls short of the $1.25 projection.

Plans for selling Dockers

Levi Strauss & Co. is implementing a transformation strategy focused on its core product—denim—and increasing sales through its own retail channels. This strategy allowed the company to surpass analysts’ expectations for adjusted earnings per share in the third quarter.

At the same time, the company is conducting a strategic review of the Dockers brand, whose sales dropped by 15% during the reporting period. Despite positive financial results, Levi Strauss has revised its fourth-quarter outlook, taking into account the decline in consumer demand in China and the continued decrease in Dockers sales.