Levi Strauss stock trades lower on weak 2024 forecast
Shares of Levi Strauss & Co. (LEVI) are trending down after the company reported fourth-quarter earnings that missed analysts' estimates. While the jeans and clothing maker revealed that net revenue increased 3% to $1.6 billion during the quarter, it also noted that it expects full-year net revenue growth of between 1% and 3%.
In addition, on Thursday Levi Strauss announced that it will lay off at least 10% of its global corporate workforce as a part of a restructuring.
Yahoo Finance anchors Josh Lipton and Julie Hyman break down the latest development for the company and what it could mean for it going forward.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
JULIE HYMAN: We're also watching shares of Levi Strauss sliding on earnings guidance. The company reported better-than-expected earnings overall, but revenue did come in light.
As we look at the headlines here, what really stands out as well is that the company is cutting jobs. It says it's going to eliminate 10% to 15% of its jobs on the corporate level. And this as Michelle Gass is poised to take over as CEO from longtime head of the company Chip Bergh here. And she's talking about newness and innovation launching this year, but they are doing those productivity initiatives, if you will. And the company is going to take estimated restructuring charges of $110 to $120 million in the first quarter related to that.
The company is also focused, says Harmit Singh, CFO of the company, on margin execution and gross margin expansion. So we'll see what that means in terms of pricing and cost inputs for Levi's as well.
JOSH LIPTON: Yeah, it looks like the job cuts, they say, are going to be charges of 110 to 120-- $120 million in Q1. The outlook also looks like it fell short versus expectations. They're calling for EPS of $1.15 to $1.25, and the Street was closer to $1.33. The executives are talking to press and saying they're planning for uncertainty and volatility in the year ahead in their wholesale business, Julie.
JULIE HYMAN: Yeah, and the stock is falling here, as we noted. But it is-- initially we saw a quick downward leg of about 5%, 5 and 1/2%. Now we're seeing it down a little more than 2 and 1/4%. So we'll see how investors continue to digest this, especially when you look at the cost-savings initiatives.
I mean, a quick thing we should mention as well as we talk about all of this, we did see revenue increase last quarter by 3%, 2% on a constant-currency basis. Direct-to-consumer revenue in particular was strong, but the company says there is some uncertainty around wholesale revenues in particular going forward.
