(News Bulletin 247) – The ready-to-wear group announces lower-than-expected growth prospects for the end of the year due to weak sales of its Dockers brand, which it is considering selling.
Levi Strauss announced plans on Wednesday to sell its underperforming cult Dockers brand. The American clothing manufacturer also indicated that it expects sales to be below expectations in the fourth quarter.
In pre-market trading Thursday on Wall Street, the stock fell about 11.4%.
A refocus on Levi’s and sports clothing
The group founded in 1853 wants to focus on strengthening the growth of its flagship brand, Levi’s, and its sportswear category, Beyond Yoga, and said it is carrying out a strategic review of Dockers, whose sales have suffered from the caution of European and American consumers.
“We are focused on realizing the full potential of the Levi’s brand and accelerating Beyond Yoga. As a result, we are undertaking an evaluation of strategic alternatives for Dockers’ global business,” said Michelle Gass, Managing Director, during of a telephone interview after the publication of the results.
As part of its cost-cutting plans, which also include layoffs, Levi Strauss has already abandoned unprofitable businesses, such as the Denizen brand and its shoe category, in some regions.
These measures helped the company post adjusted earnings per share of 33 cents in the third quarter, beating expectations of 31 cents, according to analyst estimates compiled by LSEG.
Sales down for Dockers
Dockers sales fell 15% in the third quarter and the brand contributed around 5% of total revenue for the quarter, or $1.52 billion (€1.38 billion), below the expectations of analysts who expected $1.55 billion.
“Dockers is a brand that has been out of sync with consumer trends for some time,” said Zak Stambor, an analyst at eMarketer.
Levi Strauss said it expects fourth-quarter revenue to rise by a mid-single digit percentage, compared with estimates for 7.36% growth, due to weakness in Dockers and a decline in consumer spending in China.
(With Reuters)
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