Levi Strauss forecast disappoints as virus resurgence shutters stores

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© Reuters. The Levi Strauss & Co. logo is seen on display ahead of IPO on floor of New York Stock Exchange (NYSE) in New York © Reuters. The Levi Strauss & Co. logo is seen on display ahead of IPO on floor of New York Stock Exchange (NYSE) in New York

(Reuters) – Levi Strauss & Co (NYSE:) on Wednesday forecast first-quarter results below analysts’ estimates as the resurgence of COVID-19 shutters the denim maker’s stores in major markets, sending its shares 9% lower in extended trading.

The spike in coronavirus cases from late last year has led to lower traffic at stores and fresh capacity restrictions for shopping centers in key regions such as California, denting retailers’ sales during the crucial holiday shopping season.

Levi said 17% of its stores globally were still closed, with a new wave of lockdowns in Europe shuttering 40% of the company’s footprint there.

The San Francisco-based company said it expects those stores to remain closed for the rest of the current quarter, resulting in a 10 cents to 12 cents hit to its earnings per share.

Including that impact, Levi forecast first-quarter adjusted earnings per share of 20 cents to 24 cents, below expectations of 33 cents per share, according to Refinitiv IBES data.

The company said it expects quarterly revenue to be down by a high-teens percentage in constant currency, more than estimates of an 11.9% drop.

However, the company could return to pre-pandemic revenue levels by the end of 2021 if conditions do not worsen, Chief Financial Officer Harmit Singh said.

Levi also beat estimates for the fourth quarter ended Nov. 29 as online sales soared.

Total revenue in the quarter fell about 12% to $ 1.39 billion but beat expectations of $ 1.34 billion.

Levi earned 20 cents per share on an adjusted basis, beating estimates of 15 cents per share.

The company also reinstated its quarterly dividend at 4 cents per share.

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