Bank of America Downgrades Levi Strauss & Co. Rating Due to U.S. Department Store Trends and Potential Changes in Competitive Landscape
January 19, 2023
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LEVI Intrinsic Value – Offering a wide range of apparel, Levi’s is a go-to brand for many due to its comfort and style. The downgrade from Bank of America was due to the fact that while the company is in a good position to gain from long-term margin improvements, it may be hindered by short-term obstacles such as a slump in denim demand, U.S. department store trends, and potential changes in the competitive landscape. A shift in demand for denim has caused a decline in sales, as well as an increase in competition from other brands.
Additionally, there have been changes in the U.S. department store sector, with some stores closing and others struggling to stay afloat, which could further affect Levi Strauss & ($NYSE:LEVI) Co.’s sales. The company has seen strong growth in the Asia-Pacific region, and is continuing to expand its presence in the region. Additionally, the company has been investing in differentiating its product offering and improving its online presence, which could help to boost sales and gain market share. Overall, the downgrade from Bank of America highlights the risks associated with investing in Levi Strauss & Co., but the company remains optimistic about its future prospects.
Share Price
This downgrade has caused Levi Strauss’s stock to open at $15.9 and close at 16.2, down by 0.4% from the previous closing price of 16.3. The company is known for its innovative products and commitment to quality and style. It has been a leader in the denim market for decades and has a strong presence in the U.S., Europe and Asia. This downgrade has caused Levi Strauss’s stock to open at $15.9 and close at 16.2, down by 0.4% from the previous closing price of 16.3. The potential changes in competitive landscape could also be attributed to the rise of global apparel retailers such as Zara and H&M, who have taken market share away from traditional department stores and have created a more competitive market.
Additionally, there has been a shift in consumer tastes towards more casual apparel, which could lead to further declines in demand for Levi Strauss & Co’s products. Given the current environment, Levi Strauss & Co will need to adjust its strategy to remain competitive and maintain its position as a leader in the denim market. It will need to focus on innovation, quality and style in order to differentiate itself from other apparel retailers. Additionally, it will need to continue to invest in marketing to ensure that it remains relevant with consumers. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for LEVI. More…
| Total Revenues | Net Income | Net Margin |
| 6.26k | 571.53 | 9.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for LEVI. More…
| Operations | Investing | Financing |
| 448.74 | -671.13 | -639.01 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for LEVI. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 5.9k | 4.07k | 4.62 |
Key Ratios Snapshot
Some of the financial key ratios for LEVI are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 2.7% | 8.8% | 11.2% |
| FCF Margin | ROE | ROA |
| 3.1% | 24.8% | 7.5% |
VI Analysis – LEVI Intrinsic Value
LEVI STRAUSS & CO. is a great example of a company with strong fundamentals that reflect its long term potential. A quick analysis of the company’s financials, as provided by VI app, reveals that the intrinsic value of LEVI STRAUSS & CO.’s share is approximately $23.0. This makes the stock currently undervalued by around 30%, as it is currently trading at $16.2 per share. All these factors make LEVI STRAUSS & CO.’s stock a great bargain at its current price and a great long-term investment opportunity. More…
VI Peers
In the world of jeans, there are a few major players. Levi Strauss & Co has been around since the 1850s, and their Levi’s brand is one of the most popular and recognizable names in the industry. Capri Holdings Ltd, Nike Inc, and G-III Apparel Group Ltd are all major competitors in the market, and each company has its own unique style and history.
– Capri Holdings Ltd ($NYSE:CPRI)
As of 2022, Capri Holdings Ltd has a market cap of 6.11B and a Return on Equity of 25.1%. The company operates in the luxury fashion industry and owns several high-end brands, including Jimmy Choo and Michael Kors. Capri Holdings has been successful in growing its business and generating shareholder value through a combination of organic growth and strategic acquisitions. The company is well-positioned for continued growth in the future.
– Nike Inc ($NYSE:NKE)
Nike Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is one of the world’s largest suppliers of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$37.4 billion in its fiscal year 2020. As of 2020, it employed 76,700 people worldwide.
– G-III Apparel Group Ltd ($NASDAQ:GIII)
G-III Apparel Group Ltd is a leading international manufacturer and marketer of apparel and accessories under licensed, private label and direct-to-consumer businesses. The company’s extensive portfolio of licenses includes some of the most coveted brands in the world, such as Calvin Klein, DKNY, Donna Karan, Kenneth Cole, Cole Haan, Levi’s, Vince Camuto, Tommy Hilfiger, Jones New York, Jessica Simpson, Vince, Guess?, Guess?, Ivanka Trump, G.H. Bass, Willi Smith, Ellen Tracy, Juicy Couture, Lucky Brand, Anne Klein, Basco, Nine West and Bandolino. G-III’s direct-to-consumer operations include Wilsons Leather, G.H. Bass & Co., Vilebrequin and Andrew Marc.
G-III has a market cap of 882.78M as of 2022 and a Return on Equity of 13.7%. The company is a leading international manufacturer and marketer of apparel and accessories under licensed, private label and direct-to-consumer businesses. G-III’s extensive portfolio of licenses includes some of the most coveted brands in the world, such as Calvin Klein, DKNY, Donna Karan, Kenneth Cole, Cole Haan, Levi’s, Vince Camuto, Tommy Hilfiger, Jones New York, Jessica Simpson, Vince, Guess?, Guess?, Ivanka Trump, G.H. Bass, Willi Smith, Ellen Tracy, Juicy Couture, Lucky Brand, Anne Klein, Basco, Nine West and Bandolino. G-III’s direct-to-consumer operations include Wilsons Leather, G.H. Bass & Co., Vilebrequin and Andrew Marc.
Summary
Levi Strauss & Co. has recently been downgraded by Bank of America in its investing analysis due to trends in U.S. department stores and potential changes in its competitive landscape. The downgrade is based on increasing competition from both traditional and online apparel retailers, as well as shifting customer preferences away from department stores. In addition, the company is facing a challenging macroeconomic landscape in certain markets, which could further pressure their performance. Investors should be aware of the risks associated with investing in this company and consider the potential impact of these changes before making any investments.
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