Levi Strauss & Co (NYSE:LEVI) shares backpedaled after Citi downgraded the stock to neutral from buy. The firm cited weaker denim trends that could pressure the company in the near to medium term.
Citi analyst Paul Lejuez downgraded Levi Strauss stock to Neutral from Buy as a key takeaway from the ICR Exchange was “how abruptly the trend in bottoms shifted away from denim during the 2022 back to school season” and weak holiday sales in the category. He cited commentary from both Abercrombie & Fitch and American Eagle Outfitters indicative of this trend.
“While LEVI is a strong brand with good global prospects long-term, in the near to medium term we expect a challenging US backdrop characterized by weaker denim trends to pressure results,” Lejuez wrote on Wednesday. “The Levi brand (85% of company sales) derives 60-65% of its sales from denim and they have tough comparisons in 1H23, so with deteriorating trends in the denim market broadly, we believe results are likely to be pressured in 2023.”
A conference call has been announced for later this month (Jan.25), to be hosted by Chip Bergh, president and chief executive officer, and Harmit Singh, chief financial officer.
cuss the company’s financial results for the fourth quarter ended November 27, 2022.
LEVI shares were lower by 43 cents, or 2.5%, to $16.67.
