Levi Strauss & Co stated on Tuesday its sales progress would slow in the second half of the year due to weakness in its wholesale enterprise and as it wraps up its fiscal year ahead of Black Friday, leading its shares down 6% on Tuesday.
The company forecast full-year net income progress at the high end of the mid-single-digit array after posting income growth of 6% through the first half of the year.
Chief Executive Officer Chip Bergh stated: “It (the forecast) does recommend that the second half will be softer than the first half,”
The corporate expects a 100 basis point hit to its income from not being able to report the advantage of Black Friday, one of many busiest U.S. shopping days of the year, which is five days after Levi’s fiscal year ending Nov. 24.
Bergh added that an ongoing weakness within the retail trade was pressing on its U.S. wholesale sector, which reported a 2% fall in sales. Worldwide, the enterprise accounts for a third of Levi’s income.
To counter the weakness in its wholesale business, the corporate has been spending in its online enterprise and stores, while advancing its footprints in markets corresponding to China, India, and Brazil.
The efforts helped raise sales throughout segments within the second quarter, with its women’s enterprise rising 16% and tops section rising 14%. Besides, the music festival Coachella helped drive demand for its cut-off shorts, the corporate stated.
Sales at its China unit surged 3%; however, Levi’s said the enterprise was “far from its potential” and had “major untapped opportunity.”
Selling, common, and administrative expenses improved about 7% to $638 million, significantly because of higher promoting and marketing prices.