& Co. posted a slight sales boost in the latest quarter in the face of currency fluctuations and supply-chain challenges that the company said hampered its sales.
The San Francisco-based company said Thursday that revenue increased 1% to $1.52 billion in its fiscal third quarter, or up 7% excluding currency fluctuations. Analysts polled by FactSet expected $1.6 billion in total revenue. Levi operates its own stores and sells its products through larger retailers such as
The jeans maker said supply-chain disruptions, primarily in the U.S., caused missed sales of roughly $30 million to $40 million.
said the company expects the macroeconomic environment to remain unpredictable over the next few quarters, leading the company to lower its full-year guidance.
The company now expects full-year revenue growth of 6.7% to 7%, representing 11.5% to 12% revenue growth after excluding currency fluctuations. Levi’s prior outlook called for 11% to 13% revenue growth from the year prior. Adjusted per-share earnings are expected to range between $1.44 to $1.49, down from the company’s previous outlook of $1.50 to $1.56 per share.
Levi’s results come as a range of apparel retailers face falling sales as consumers shift their spending away from clothing and other discretionary items. That has forced some retailers to step up discounts to clear through excess inventory.
Retailers such as
& Co. and
lowered their sales targets for the year in late August, and
withdrew its guidance as it works to reduce inventory to match consumer demand and reduce operating costs.
Levi said consumer demand for its Levi’s and Dockers brands helped buoy revenue despite its supply chain issues and difficult market conditions. Revenue for the Levi’s brand increased 6% and the Dockers brand recorded 13% higher revenue on a constant-currency basis, the company said.
The company generally has benefited from growth in denim sales and a more casual approach to work attire as companies return to the office, according to executives. Levi has expanded its product line in recent months, and management said in July that price increases from earlier this year haven’t curbed demand. The company is also attempting to ramp up its direct-to-consumer business and plans to accelerate investments in stores and online platforms.
But executives on Thursday said they were proceeding with caution for the remainder of the year as the stronger U.S. dollar and other macroeconomic conditions dampened their outlook for North America and Europe.
Levi plans to control discretionary spending while it continues to navigate a difficult operating environment, Chief Financial Officer
Levi’s inventories rose 43% in the third quarter from a year earlier. The company said the increase was primarily because of inflation for costs of goods sold and pulling inventory forward to sidestep supply-chain risks.
For the quarter ended Aug. 28, Levi posted earnings of $173 million, or 43 cents a share, compared with $193 million, or 47 cents a share, a year earlier. Adjusted per-share earnings were 40 cents, ahead of analysts’ expectations of 37 cents.
Shares fall 5% to $15.13 in after-hours trading on Thursday following a 3.9% drop in the day’s regular session.
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Appeared in the October 7, 2022, print edition as ‘Levi Sales Edge Up Amid Supply-Chain Issues.’