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

Denim is having a moment with consumers, but it hasn't led to a major sales boost at Levi Strauss. 

The jeans creator on Wednesday posted fiscal second-quarter revenue that fell just short of Wall Street's expectations at a time when shoppers are stocking their wardrobes with denim dresses, skirts and ultra low-rise baggy pants. 

Levi's posted better-than-expected earnings as its direct sales to consumers and cost cutting continue to bear fruit. The company raised its dividend by 8% to 13 cents per share, its first increase in six quarters.

Still, shares fell about 12% in extended trading.

Here's how Levi's performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

The company's reported net income for the three-month period that ended May 26 was $18 million, or 4 cents per share, compared with a loss of $1.6 million, or zero cents a share, a year earlier. Excluding one-time items, Levi's posted earnings of $66 million, or 16 cents per share. 

Sales rose to $1.44 billion, up about 8% from $1.34 billion a year earlier. However, the sales jump was coming off of an easier comparison.

In the year-ago period, sales were down 9% after Levi's shifted its wholesale shipments from its fiscal second quarter into its fiscal first quarter. The shift reduced sales last year by about $100 million, the company said previously. Excluding the shift, as well as the exit of Levi's Denizen business, sales would have been up by only about 1% in its most recent quarter compared to the year-ago period. 

Finance chief Harmit Singh attributed the sales miss to unfavorable foreign exchange conditions and weak sales at Docker's. During the quarter, the khaki and chinos brand saw $82.4 million in

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