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Levi Strauss expects better margins

  

In spite of higher costs and currency pressures Levi Strauss expects an improvement in gross margins for 2023.

The American company is seeing a boost from its direct-to-consumer business, with strong demand for non-denim clothing and women's apparel helping it offset slumping sales in Europe and an overall decline in wholesale revenue. However, the company does expect lower revenues in the firsthalf of the year. So it thinks of fiscal 2023 as a tale of two halves, with the first half weaker than the second half.

Nearly 40 per cent of Levi’s 2022 revenue came from categories outside denim bottoms, including chinos, leggings, tops, dresses, footwear and accessories. Levi’s projects net revenues between $6.3 billion and $6.4 billion for fiscal 2023. It expects full-year adjusted profit between $1.30 and $1.40 per share. Levi’s fourth quarter revenue fell six percent but edged past estimates while the adjusted profit topped expectations.

With shoppers now buying more office-friendly and non-denim bottoms such as formal trousers and cargo pants, there is some uncertainty around denim demand in the nearterm.With the United States on the edge of a recession, shoppers, pressured by high inflation, are spending less on discretionary items like clothing, with the denim category, in particular, set for a slowdown following a demand surge in 2021.

 
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