Rough Patch Ahead For Levi Strauss, But Analysts Predict Better Days To Come

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of Levi Strauss & Co LEVI with a $24 price target.
Despite a still uncertain and challenging global macro environment, LEVI delivered a solid start to FY23, including a top and bottom line beat in the first quarter.
While the topline benefited from a $100 million shift in wholesale shipments from Q2 into Q1, this shift was previously communicated, noted the analyst.
By channel, DTC growth remained strong in 1Q23, offsetting slower growth in the wholesale channel as retailer inventory rebalancing in Europe continues to weigh on the channel.
LEVI reiterated both its revenue and EPS outlook for the year, reflecting confidence in the operating model, said the analyst.
The analyst expects the company to continue to benefit from strength in the DTC and international business, while macro headwinds potentially shifting to tailwinds in 2H23 can further support growth.
Consumers in both the Americas and Europe are under pressure and taking a measured approach to spending, though that tightness has not been seen in China as much to date.
Despite near-term headwinds that weighed on the gross margin in Q1 and are expected to continue to weigh through Q2, margins should improve over the course of the year, said the analyst.
Also Read: Levi Strauss' Resilient Business Model: Analysts Predict 2023 Growth Despite Stock Dip
Price Action: LEVI shares are trading higher by 2.94% at $15.59 on the last check Monday.
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