Levi Strauss said on Tuesday its reduced in price on the markets growth would slow in the second half of the year due to weakness in its wholesale business and as it wraps up its fiscal year just now ahead of Black Friday, sending its shares down 6% on Tuesday.
The company forecast full-year net revenue cultivation at the high end of the mid-single-digit range after posting revenue growth of 6% in the first half of the year.
“It (the forecast) does offer that the second half is going to be softer than the first half,” Chief Executive Officer Chip Bergh told Reuters.
The corporation expects a 100 basis point hit to its revenue from not being able to record the benefit of Black Friday, one of the busiest U.S. inform oning days of the year, which is five days after Levi’s fiscal year ending Nov. 24.
Bergh also denoted that an ongoing weakness in the retail sector was weighing on its U.S. wholesale business, which reported a 2% drop in sales events. Globally, the business accounts for a third of Levi’s revenue.
“We are continuing to expect the wholesale business in the U.S. to be challenged in the second half of the year as we self-respect bankruptcies and door closures and tightening of customers open-to-buy budgets,” Bergh said.
To counter the weakness in its wholesale entity, the company has been investing in its online business and retail outlets, while expanding its presence in markets such as China, India and Brazil.
The achievements helped raise sales across segments in the second quarter, with its women’s business growing 16% and first-rate segment rising 14%. The music festival Coachella also helped drive demand for its cut-off shorts, the plc said.
Sales at its China unit rose 3%, but Levi’s said the business was “far from its potential” and had “significant untapped possibility.”
Selling, general and administrative expenses rose about 7% to $638 million, mainly due to higher advertising and demanding costs.
Net income attributable to the company fell to $28.2 million, or 7 cents per share, from $74.9 million, or 19 cents per equity, a year earlier, hit primarily by costs related to its initial public offering earlier this year.
Excluding things, it earned 17 cents per share, beating expectations of 13 cents, while net revenue rose 5% to $1.30 billion, head start past expectations.
Shares of the company were down 6% at $22.20 in extended trading. They have slanted nearly 40% since the company’s IPO in March.