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Levi's bleak 2025 profit forecast after strong holiday quarter hits shares
Published by Global Banking and Finance Review
Posted on January 29, 2025
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Published by Global Banking and Finance Review
Posted on January 29, 2025
By Juveria Tabassum
(Reuters) - Levi Strauss forecast annual profit well below analysts' estimates, taking a cautious stance despite a strong holiday quarter and sending its shares down about 8% in extended trading on Wednesday.
The company's struggling U.S. wholesale business returned to revenue growth after six quarters of decline, as newness in its collections, including men's apparel, attracted demand from retailers.
Still, executives on a post-earnings call said they expect the channel to be flat in 2025.
"We recognize there continues to be a lot of uncertainty related to the macro environment, potential changes in tariffs, as well as worsening foreign exchange... the best approach for us is to plan prudently," finance head Harmit Singh said.
The company projected annual adjusted profit per share of $1.20 to $1.25, compared with expectations of $1.37, according to data compiled by LSEG.
The forecast "underscores the uncertainty facing many retailers as they struggle to navigate President Trump's tariff threats and a more unpredictable environment - although Levi's limited exposure to China, Mexico, and Canada means it is better equipped than most to navigate those headwinds," said Rachel Wolff, analyst at EMarketer.
Levi introduced an organic revenue growth target of 3.5% to 4.5% for fiscal 2025, excluding the impact of divested business and foreign exchange rates.
It expects reported net revenue to fall between 1% and 2%. Analysts had estimated 2025 revenue to rise 3.7%.
In the holiday quarter, customers bought Levi's trendy denim dress collection and wide-legged bottoms, lifting net revenue 8% to $1.84 billion and beating estimates of $1.73 billion.
Under Michelle Gass, who completed one year at the top in January, Levi has trimmed its portfolio and focused on its direct-to-consumer channel.
Excluding items, the company earned 50 cents per share in the reported quarter, topping estimates by 2 cents.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Sriraj Kalluvila)