Levi's shares drop 12% as jeans maker's sales disappoint despite denim craze

- Levi Strauss posted fiscal second-quarter revenue that missed Wall Street expectations - Earnings per share were higher than expected, while revenue was slightly lower - Net income increased to $18 million due to cost cutting efforts - Sales for the quarter were up 8% to $1.44 billion, but much of this increase was attributed to easier comparisons - Levi's CFO attributed the sales miss to unfavorable foreign exchange conditions and weak sales at Docker's - Levi's is transitioning to a new distribution and logistics strategy that includes more reliance on third parties - Direct-to-consumer sales increased 8% and now represent 47% of overall sales - By shifting to direct sales, Levi's hopes to increase profits and have better control of its branding - The company acknowledged the potential challenges of a direct sales model based on Nike's experience - Levi's stock fell about 12% in after-hours trading despite an earnings beat - Levi's shares dropped 12% due to disappointing sales despite denim's popularity - Levi's narrowly missed Wall Street's sales expectations - CFO cited consumers being cautious, not spending much on discretionary items - Levi's working to reduce reliance on department stores by building out its own website and stores - Levi's posted better-than-expected earnings, raised dividend by 8%, but shares still fell - Financial performance slightly missed analyst expectations for earnings per share and revenue - Direct-to-consumer sales represent 47% of overall sales and are key to the company's growth strategy - Levi's transitioning to a DTC-first company, raising profits and reducing reliance on wholesalers - Selling directly can be more expensive and present unforeseen challenges - Nike serves as a cautionary example for retailers shifting focus to direct sales