Jan 25 Reuters Levi Strauss Co forecast annual sales above Wall Street estimates on Wednesday, banking on a stronger backhalf of the year even as higher costs and currency pressures cloud its nearterm outlook.

Shares of the denim maker jumped more than 6 in extended trading after it also topped fourthquarter sales and profit expectations and projected an improvement in gross margins for 2023.

The San Franciscobased company is seeing a boost from its directtoconsumer business, with strong demand for nondenim clothing and women39;s apparel helping it offset slumping sales in Europe and an overall decline in wholesale revenue.

However, the company said it expects lower revenues in the firsthalf of the year.

We39;re thinking about fiscal 2023 as a tale of two halves, with the first half weaker than the second half, said Chief Financial and Growth Officer Harmit Singh.

With shoppers now buying more officefriendly and nondenim bottoms such as formal trousers and cargo pants, analysts have flagged uncertainty around denim demand in the nearterm.

Nearly 40 of Levi39;s 2022 revenue came from categories outside denim bottoms, including chinos, leggings, tops, dresses, footwear and accessories, Chief Executive Chip Bergh told investors on a postearnings call.

They seem very bullish on their numbers for the year, but I do have to say that Levi is one of the top brands, their product is very good … and it is a brand that the customer will go back to if they are shopping,…