Levi Strauss (LEVI) Stock Forecast & Price Target

Levi Strauss & Co. demonstrated a significant expansion in gross margin, rising 350 basis points to 61.3%, attributed to lower product costs and a favorable sales mix. Organic sales reflected strong performance, with Dockers increasing by 5% year-over-year and overall tops rising by 8%, indicating successful growth initiatives. Additionally, fourth quarter sales in Europe rose by 14.5%, further supporting a positive outlook driven by robust regional performances across its key brands.

Levi Strauss & Co. is experiencing a concerning financial outlook, as evidenced by an increase in adjusted SG&A expenses, which surged to 47.8% of sales, significantly higher than both analyst expectations and prior year performance. The company projects organic revenue growth of only 3.5%-4.0% for the first quarter, which, when factoring in foreign exchange headwinds and exits from specific product lines, implies a potential sales decline of 1%-2%. Furthermore, the anticipated FY25 earnings per share guidance of $1.20-$1.25 falls short of market expectations and reflects broader weaknesses such as dwindling operating margins in the Asia segment, which declined by 350 basis points year-over-year.