Levi Strauss' fiscal third-quarter earnings exceeded expectations while its revenue fell short of projections from Wall Street. The company announced that it is exploring strategic alternatives for the Dockers brand, which has faced a decline in sales. Adjusted earnings per share rose to $0.33 during the three-month period ending August 25, up from $0.28 in the same quarter last year, thus surpassing the consensus forecast on Capital IQ, which estimated earnings of $0.31.
Although revenue increased slightly, reaching $1.52 billion, it still missed analysts’ expectations of $1.55 billion. The company reported a 10% growth in direct-to-consumer channel sales, benefiting from increased demand in both the US and European markets. However, wholesale net revenue saw a decline of 6%.
The Levi's brand revenue demonstrated resilience with a 5% global increase, while Dockers, known for its chinos and khakis, experienced a significant drop of 15% in sales. Levi Strauss indicated that its ongoing review of the Dockers brand could potentially lead to a sale or another type of transaction.
The organization has emphasized that it has not established a deadline for the strategic alternatives review, acknowledging the uncertainty around whether this process will yield any definitive outcomes or transactions. In the wake of these announcements, Levi Strauss shares declined approximately 8% in after-hours trading.
For fiscal 2024, the company now anticipates a revenue increase of 1% year-over-year, in contrast to its previous expectations of 1% to 3% growth. The current consensus on Capital IQ projects total revenue reaching $6.32 billion. Additionally, the company expects adjusted earnings per share to land at the midpoint of its previous forecast range of $1.17 to $1.27, with the market estimating this figure at $1.25. Price: 19.38, Change: -1.68, Percent Change: -7.98.