What’s happening: Shares of Levi Strauss fell on Thursday, after the company released results for its fiscal third quarter.
What happened: The iconic denim company reported better-than-expected earnings for the latest quarter.
However, Levi Strauss failed to meet sales estimates and disclosed that it is considering the sale of its Dockers brand.
How were the results: The San Francisco, California-based company reported almost flat sales for the latest quarter.
Why it matters: Levi Strauss announced a strategic review of its Dockers brand, including the possibility of a sale, as the brand’s sales contracted by 15% in the quarter. Dockers accounted for around 5% of the company’s total revenues in the latest quarter.
“We are narrowing our focus to realise the full potential of the Levi’s brand as well as accelerate Beyond Yoga. Accordingly, we are undertaking an evaluation of strategic alternatives for the global Dockers business,” CEO Michelle Gass said.
The company said its DTC (Direct-to-Consumer) net revenues grew 10% in the quarter, up 12% on a constant-currency basis, with 12% growth in the US and 9% in Europe.
Wholesale net revenues fell 6%. The figure is down 3% adjusting for the exit of the Denizen business.
Gass further mentioned that the Levi’s brand grew 5% globally in the third quarter, representing a significant acceleration from the first half of the year and the highest revenue growth in two years.
Management guided to adjusted earnings between $1.17 and $1.27 per share for fiscal 2024. They projected revenue growth in the mid-single-digit percentage range for the fourth quarter, below market expectations of 7.4%.
How shares responded: Shares of Levi Strauss tanked 7.7% to close at $19.44 on Thursday, following the release of quarterly results. The stock has gained around 20% year to date.
What to watch: Investors will continue monitoring overall consumer spending in Europe and the US, which is expected to significantly impact the company’s overall results ahead.
Context: The GBP/USD forex pair fell sharply on Thursday amid higher demand for safe-haven assets.
Details: Bank of England Governor Andrew Bailey said that policymakers could lower interest rates more quickly in case inflation remains under control. The BoE reduced its benchmark interest rates from 5.25% to 5% in August, representing the first cut in over four years.
Markets widely expect the BoE to cut interest rates by another 25 bps at its meeting in November. Traders are pricing in a cut of 41 bps by yearend.
Strength in the US dollar exerted pressure on the GBP/USD forex pair. The greenback gained support amid rising demand for safe-haven options among investors, due to an escalation in geopolitical tensions. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% to 101.99 on Thursday.
The GBP/USD forex pair fell more than 1% to 1.3125 on Thursday, recording its biggest single-day plunge since April. The EUR/GBP jumped around 1% to 0.8406, notching its biggest single-session surge since December 2022.
London’s FTSE 100 slipped 0.1% to close at 8,282.52 on Thursday.
What to watch: Investors await the release of economic data on new passenger car registrations and construction PMI from the UK today. New passenger car registrations in the UK, which declined 1.3% year-over-year in August, are expected to increase by 2.5% in September. Analysts expect the S&P Global UK construction PMI to decline to 53.1 in September, from 53.6 in August.
The US NFP report, due to be released today, will also remain in focus, as it would stir speculations around the Federal Reserve’s next monetary policy move.
Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.44%, 0.17% and 0.05%, respectively.
Russia’s military forces launched a major drone attack on 15 regions in Ukraine, leading to widespread damage to commercial and residential infrastructure. The news sent the RUB/USD pair higher in forex trading this morning.
The Philippines said its annual inflation eased to 1.9% in September, from 4.4% in the previous month. This being the lowest inflation rate since May 2020 lent support to the PHP/USD forex pair.
Australia’s value of new home loans for owner-occupied homes increased by 0.7% to A$18.68 billion in August, which sent the AUD/USD pair higher in forex trading this morning.
Hong Kong’s S&P Global SAR PMI climbed to 50.0 in September, from 49.4 in the previous month. This being the highest private sector PMI since April lent support to the HKD/USD forex pair.
US S&P Global services PMI fell to 55.2 in September, from 55.7 in the previous month. The figure also came in below a preliminary reading of 55.4 and sent the Dow Jones index lower by more than 150 points on Thursday.
France’s industrial production and construction PMI, Spain’s industrial output, Eurozone’s construction PMI, Germany’s construction PMI, Italy’s construction PMI and value of retail sales, India’s bank loan growth, deposit growth and foreign exchange reserves, Mexico’s unemployment rate, auto exports and car output, US nonfarm payrolls, unemployment rate, average hourly earnings, Baker Hughes crude oil rigs, and Baker Hughes total rigs, Canada’s Ivey Purchasing Managers Index, Brazil’s balance of trade, as well as Turkey’s balance of trade.