Levi Strauss (NYSE:LEVI) fell 7.7% after slashing its profit outlook for the year post-market Thursday. Levi now expects adjusted earnings per share of $1.10 to $1.20 for the year, down from $1.30 to $1.40 previously. Analysts had expected adjusted earnings per share of $1.29, according to Refinitiv.
Wholesale revenue was impacted in Q2 by a consumer slowdown impacting the retail industry and internal issues at Levi that resulted in items being out of stock, according to CEO Chip Bergh.
"Our inventory backlog created supply chain challenges in our U.S. distribution centers resulting in our inability to fulfill all demand. The lower fill rate resulted in higher customer out of stock and less newness on the floor the last few quarters. We're taking a number of actions to address these issues, regain competitiveness and restore growth to our U.S. wholesale business," updated Bergh on the LEVI earnings conference call.
While Levi Strauss announced they are cutting prices for roughly 10% of U.S. wholesale styles in tier 3 wholesale accounts, Bank of America analyst Christopher Nardone noted the pricing actions are isolated to a small subsegment of Levi Strauss' total business and the company has no plans of altering pricing in other business such as DTC, International, women’s fashion, and the 501 lines.
LEVI shares fell $1.03, or 7.2%, to $13.21.
