Levi Strauss' forecast is disappointing as virus resuscitation closes shops

© Reuters. The Levi Strauss & Co. logo can be seen on the floor of the New York Stock Exchange (NYSE) in New York prior to the IPO

(Reuters) – Levi Strauss & Co. (NYSE 🙂 on Wednesday forecast its first quarter results below analysts' estimates as the COVID-19 resurgence is closing the denim maker's stores in major markets and causing its stocks to fall 9% in expanded trading.

The surge in coronavirus cases since late last year has resulted in lower traffic in stores and new capacity constraints for shopping malls in key areas like California, and has affected retailer sales during the crucial Christmas shopping season.

Levi said 17% of stores around the world were still closed, and a new wave of lockdowns in Europe has shut down 40% of the company's presence there.

The San Francisco-based company expects these stores to remain closed for the remainder of the current quarter, causing earnings per share to fall by 10 to 12 cents.

Including those effects, Levi forecast adjusted earnings per share of 20 to 24 cents for the first quarter, which, according to Refinitiv IBES data, was below expectations of 33 cents per share.

The company predicts quarterly sales will decrease a large percentage of teenagers at constant exchange rates, more than estimates of an 11.9% decrease.

However, the company could return to pre-pandemic revenue by the end of 2021 if conditions don't worsen, CFO Harmit Singh said.

Levi also beat estimates for the fourth quarter ending November 29th as online sales rose.

Total revenue for the quarter was down 12% to $ 1.39 billion, but exceeded expectations of $ 1.34 billion.

Levi made an adjusted 20 cents per share, beating the estimates of 15 cents per share.

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

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