Levi Strauss warns of weak second half
Levi Strauss & Co fell more than 8 per cent on Wednesday as the denim apparel maker cautioned its business would be hit in the second half of the year, even as its sales have been improving at its reopened stores.
The San Francisco-based company reported late Tuesday that following government-mandated COVID-19 lockdowns it would also cut about 700 positions, or roughly 15 per cent of its workforce, in non-retail, non-manufacturing segments that would help it save us$100 million annually.
Met with temporary closure of its own stores as well as partner outlets, Levi introduced curbside pickup and started fulfilling online orders at its stores as customers turned to online shopping to avoid contact with people.
The company reported a 25 per cent increase in its online business in the second quarter ended May 24, with a month-over-month rise of nearly 80 per cent in May.
Levi added that weekly sales performance in company-operated stores was improving sequentially, as productivity in the final week of June reached 80 per cent compared to a year earlier.
Still, chief executive Chip Bergh said that he was “cautiously optimistic” about the early trends.
The company also expects its margins for the rest of the year to be under pressure as it tries to offload excess inventory that remained unsold during the lockdowns.
Shares of the company, which have lost about a quarter of their value since the start of the year, fell in extended trading on Tuesday and continued to slide Wednesday. They closed down 8.3 per cent at us$12.68 in New york trading.
Net revenue in the second quarter fell 62 per cent to us$497.5 million, but beat analysts’ expectations of us$485.5 million, according to IBES data from refinitiv.
Levi reported net loss attributable to the company of us$363.5 million compared with a profit of us$28.2 million, a year earlier, largely due to us$242 million in restructuring charges and inventory costs.
On an adjusted basis, the company posted a loss of us48 cents per share, narrower than expectations.