- Levi Strauss & Co. sank to a record low on Wednesday after Goldman Sach’s issued a warning about the US apparel sector.
- Goldman downgraded Levi’s, PVH, and Ralph Lauren all to “sell” ratings, citing concerns around excessive inventory and the continuation of tough retail trends from the first half of the year.
- Watch Levi trade live.
Goldman Sachs has concerns about the US retail sector.
Levi Strauss & Co. fell more than 5% to a record low on Wednesday after the bank downgraded the company and two other retailers to a sell rating due to uncertain outlook for US apparel.
“Recent results were evidence that the company is not immune from headwinds in the US wholesale channel,” Goldman said in the report.
The report said some apparel companies were too optimistic with springs orders which has left some major retailers with excessive inventory and slowing ordering as they head into the back-to-school and holiday seasons.
“While brands that have been investing in building strong direct-to-consumer omnichannel commerce are likely to be more insulated, we take a more cautious view on non-athletic apparel brands whose direct-to-consumer businesses are skewed towards outlet stores,” the report said.
Goldman also cited consumer’s shifting toward online ordering and off-price products as additional risks for the three retailers.
“For the longer term, we retain our cautious stance on the outlook for department store retailers and our positive stance on the trajectory of online, DTC and off-price retailers.” Goldman said.
Trading at $18.83, Levi is still above its initial public offering price of $17.
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