Levi Strauss & Co. (LEVI) reported third quarter adjusted earnings of $0.28 per share, slightly better than the $0.27 analysts had expected. Revenue, however, fell short, $1.51 billion compared to the $1.54 billion that was expected. The company also cut its full-year sales guidance, citing weakness in its wholesale channel. Yahoo Finance Live breaks down the apparel company's results.
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JULIE HYMAN: For the second quarter in a row, we have an earnings disappointment from Levi Strauss, watching the shares fall by about 3% after the company reported third quarter earnings that missed Wall Street's revenue expectation. Another big headline, the denim maker cut its full-year sales guidance. And it is the same thing to blame that was to blame back in July when it came out with negative numbers as well.
The wholesale channel is really suffering. The direct-to-consumer doing OK. But wholesale through other channels is just not as strong, Josh.
JOSH LIPTON: Yeah. And I thought the CEO's comments to Bloomberg were also interesting, saying the middle-income consumer and below are definitely being impacted, especially in the US and parts of Europe. The consumer, this executive saying, is really feeling squeezed. I think maybe placed into some of what we've been hearing this week from different economists and strategists. There are these storm clouds brewing for consumers that we talk about the rising energy prices, the higher borrowing costs, and, of course, resumption of federal student loan payments.
You know, you'll see-- and by the way, Levi's, of course, the first big us apparel retailer to report this earnings season. So some investors probably looking ahead and thinking what does that mean for Macy's and Gap, et cetera.
JULIE HYMAN: I mean, earnings season never ends at this point. It feels like we just heard from the big crop of retailers like at the end of August. And now we're getting Levi's here. Just to give-- I don't want to bog anyone down with numbers, but that important number that is the net revenue forecast for the full year. Levi's is now saying, revenue this year will be flat to up 1%. It previously had it's seen an increase of 1 and 1/2% to 2 and 1/2%. And again, a lot of that coming because of weakness in the wholesale channel.
Its direct-to-consumer revenues were up 14%. But wholesale revenues were down 8%. It's still seeing what it saw last quarter as well, weakness in the Americas and in Europe, more strength in Asia. But really, quite a patchy picture overall for the likes of Levi's.
JOSH LIPTON: All right.