Shares of Levi Strauss faced a decline on Thursday after the company reduced its revenue growth outlook for the year and reported a loss in its latest quarter. The primary reason for this setback was a significant decrease in wholesale revenue in the U.S.
The San Francisco-based jeans maker’s stock experienced a 5.8% drop to $13.40 during after-hours trading.
While Levi Strauss had previously maintained its guidance for the year ending in November, citing a 2% increase in wholesale revenue, the latest quarter brought about an unexpected reversal. Unfortunately, the company recorded a 22% decline in wholesale revenue.
Levi Strauss, like Nike, has recognized the need to shift its strategic focus towards developing its direct-to-consumer business through its physical stores and online platform.
According to President and Chief Executive Chip Bergh, “Today, U.S. wholesale represents less than 30% of our total revenues, down from 40% a decade ago. The macro effects of higher inflation and a slowing U.S. economy have put increased pressure on the price-sensitive consumer.”
To regain growth in its U.S. wholesale business, Levi Strauss mentioned implementing measures such as offering discounts to its Red Tab Tier-3 awards program wholesale offerings.
(Original article by Sabela Ojea)