Levi's shares drop 12% as jeans maker's sales disappoint despite denim craze
Why did Levi Strauss miss Wall Street's sales expectations?
Levi Strauss missed Wall Street's sales expectations due to a combination of factors, including consumers being cautious with spending, unfavorable foreign exchange conditions, and weak sales at Docker's. The company's transition to a more direct-to-consumer sales model and increased reliance on third-party logistics also contributed to the sales miss.
How did Levi's revenue compare to the previous year?
Levi's revenue in the fiscal second quarter was $1.44 billion, up about 8% from $1.34 billion in the same period last year. However, this sales increase comes off an easier comparison, as sales were down 9% in the year-ago quarter due to a shift in wholesale shipments. Adjusting for this shift and the exit of Levi's Denizen business, sales would have been up by about 1% compared to the year-ago period.
What changes is Levi's making to its distribution and logistics network?
Levi's is transitioning from a primarily owned-and-operated distribution and logistics network in the U.S. and Europe to one that relies more on third parties. This change allows Levi's to shift the responsibility of final mile delivery to third parties and results in the company taking ownership of inventory closer to the point of shipment rather than its eventual destination.