Levi Strauss Shares Slide After FY22 Outlook Cut, Mixed Q3 Results

Levi Strauss & Co LEVI reported third-quarter FY22 revenue growth of 1.3% year-over-year to $1.52 billion, +7% on a constant-currency basis, missing the consensus of $1.60 billion.
Global DTC net revenues increased 2% Y/Y, comprising 29% of total sales.
Wholesale net revenues grew 1% Y/Y, and global digital net revenues climbed 9% Y/Y.
Adjusted EPS was $0.40, beating the consensus of $0.37.
The adjusted gross margin was 56.9%, a contraction of 60 basis points from Q3 FY21.
The operating margin was 13.1%, and the Adjusted EBIT margin of 12.4%, down from 14.8% in Q3 FY21.
Adjusted EBITDA for the quarter was $226.7 million.
Levi Strauss' cash and cash equivalents stood at $600 million as of August 28, 2022. Total inventories increased 43% Y/Y. Net debt was $372.4 million.
Cash from operations for nine months was $210.3 million compared to $498.8 million in Q3 FY21.
As of August 28, 2022, the company had $724 million remaining under its current share repurchase authorization.
Outlook: Levi Strauss expects FY22 revenue growth of 6.7% to 7.0%, representing 11.5% to 12% net revenues growth on a constant-currency basis. The company's prior forecast for net revenue growth was 11% - 13%.
It lowered FY22 EPS guidance to $1.44 - $1.49 from $1.50 - $1.56 against an estimate of $1.54.
Price Action: LEVI shares are trading lower by 4.27% at $15.25 in premarket on the last check Friday.

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