Levi Strauss Analyst Raises Forecast After Q4 Print, Notes Headwind From Denizen Exit

Shares of Levi Strauss & Co LEVI declined in premarket trading on Friday, after the company reported fourth-quarter results.

Despite softer revenues and plans to cut 10% to 15% of global corporate jobs, the San Francisco-based company reported an earnings beat, driven by higher gross margin expansion and a lower tax rate, according to Telsey Advisory Group.

The Levi Strauss Analyst: Dana Telsey maintained an Outperform rating for Levi Strauss, while raising the price target from $16 to $18.

The Levi Strauss Thesis: The company, soon-to-be under the helm of incoming CEO, Michelle Gass, was able to generate higher-than-expected gross margin expansion.

Telsey credited this to “lower product costs, favorable channel mix, and stronger full-price sales."

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Levi Strauss guided to low single-digit revenue growth for fiscal 2024, which reflects “headwind from the Denizen business exit, lower off-price sales, and unfavorable FX, partially offset by a benefit from the 53rd week,” the analyst wrote.

Although the apparel maker’s fourth-quarter performance was “a bit of a mixed bag,” all three regions “returned to growth for the first time since 2Q22, speaking to the health of the brand globally, she added.

LEVI Price Action: Shares of Levi Strauss declined by 2.03% to $15.43 in the premarket session on Friday.

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