Levi Strauss warns of margin decline in 2023 as promotions, costs bite

Levi Strauss & Co on Thursday warned of a margin crunch this year as it would have to offer higher promotions than previously anticipated while also grappling with higher costs, sending its shares tumbling 16% in morning trade.

The Levi Strauss & Co. label is seen on jeans in a store at the Woodbury Common Premium Outlets in Central Valley, New York, U.S., February 15, 2022. REUTERS/Andrew Kellyon Thursday warned of a margin crunch this year as it would have to offer higher promotions than previously anticipated while also grappling with higher costs, sending its shares tumbling 16% in morning trade.

Bloated inventories have also forced Levi to follow its peers in ramping up discounts and promotions to push products out of the door, further crimping margins. Its first-quarter adjusted gross margin slid 360 basis points to 55.8%. "The lower-end consumer is making hard choices and either trading down or just not buying denim," Chief Executive Officer Chip Bergh said on a post-earnings call.

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