<\/p>\n
\n\tPerfection doesn\u2019t exist in the world of corporate fashion, so how one gets back up is more important than how they fall.<\/p>\n
\n\tWitness Levi Strauss & Co., which saw its direct-to-consumer business stumble in its fiscal third quarter, with organic revenue growth slowing to 2 from 8 percent in the second quarter, disrupting what has been a strong run.<\/p>\n
\n\tMichelle Gass, chief executive officer, was clear about the reasons \u2014 extreme heat in Europe and mismatched marketing in the U.S. \u2014 and quick to add that the DTC business is already back on track and is expected to post midsingle-digit growth for the current quarter.<\/p>\n
\n\tShares of the company were down 3.8 percent to $18.77 in midday trading Thursday, a relatively modest downturn in a market where investors and analysts are ready to pounce on any sign of weakness.<\/p>\n
\n\tLevi\u2019s \u2014 under Gass as well as her predecessor Chip Bergh \u2014 has built up a certain credibility and is getting the benefit of the doubt.<\/p>\n
\n\tBNP Paribas analyst Laurent Vasilescu summed it up as a \u201cno harm, no foul\u201d situation.<\/p>\n
\n\tAnd Needham analyst Tom Nikic called it a \u201cvery noisy print,\u201d but was encouraged by the \u201creacceleration in DTC.\u201d<\/p>\n
\n\t\u201cFortunately this seems to be just a short-term blip,\u201d Nikic said.<\/p>\n
\n\tNeil Saunders, who is managing director of GlobalData and not known for pulling punches, said, \u201cLevi\u2019s had a solid third quarter, even if some of the recent heat has come out of the growth figures.<\/p>\n
\n\t\u201cThe slightly slower growth doesn\u2019t take away from the fact that Levi\u2019s has a very sound underlying strategy,\u201d Saunders said. \u201cWhile it is an iconic label with a very rich history, it also feels very youthful and fast moving. Much of this comes from the energy inside the business, which has changed the way the brand presents itself to consumers.\u201d<\/p>\n
\n\tHarmit Singh, the denim company\u2019s outgoing chief financial and growth officer, told analysts on a conference call that the company received some $80 million in tariff refunds in the quarter and has \u201credeployed\u201d $60 million of that, with a third going to marketing, a third to distribution and a third to promotional activities.<\/p>\n
\n\t\u201cIn Q3, the majority was promotions, a little bit of advertising, a little bit of inventory clearance,\u201d Singh said. \u201cIn Q4, it\u2019s largely advertising, marketing, distribution and slight promotions.\u201d<\/p>\n
\n\tThe trick for Levi\u2019s is going to be to ensure its DTC \u201creacceleration\u201d continues.<\/p>\n
\n\tStrong companies that trip, get a pass. Companies that keep falling down get reevaluated.<\/p>\n
#Analysts #Remain #Confident #Recovery<\/p>\n","protected":false},"excerpt":{"rendered":"
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