Levi Strauss & Co. delivered stronger-than-expected quarterly earnings and revenue, powered by selective price increases and a growing shift toward direct sales. The results show how the denim icon is managing inflation and tariffs while maintaining consumer demand.
For the quarter ended August 31, Levi’s reported adjusted earnings per share of 34 cents, above Wall Street expectations of 31 cents, and revenue of $1.54 billion, beating estimates of $1.50 billion, according to LSEG data.
Margins Improve As Levi’s Sells More Directly To Consumers
The company’s gross margin rose 1.1 percentage points to 61.7%, surpassing analyst forecasts of 60.7%. Levi’s attributed the gain to higher full-price sales, fewer discounts, and the success of its direct-to-consumer (DTC) strategy, which includes sales through its own stores and website rather than wholesalers.
CEO Michelle Gass said Levi’s is strategically increasing prices across certain products and plans additional hikes next year in the U.S. and international markets.
“We’ve not seen any impact to demand,” Gass told CNBC. “We’re taking a surgical, thoughtful approach on pricing because Levi’s stands for both quality and value.”
CFO Harmit Singh added that most of the company’s revenue growth still comes from volume and product mix, not pricing, indicating resilient consumer appetite despite higher costs.
Earnings Beat Expectations, But Stock Slips
Despite the upbeat earnings, Levi’s shares fell over 6% in after-hours trading, following a strong rally of 42% year-to-date. Analysts suggested investors may have taken profits after the stock’s recent surge.
Net income for the quarter reached $218 million, or 55 cents per share, up sharply from $20.7 million, or 5 cents per share, in the same period last year. Excluding one-time charges, adjusted profits stood at 34 cents per share.
Sales climbed 7% year-over-year, fueled by double-digit growth in DTC channels and steady global demand for denim apparel.
Full-Year Outlook Raised Amid Solid Performance
Strong quarterly results prompted Levi’s to raise its full-year guidance. The company now expects sales to grow around 3% for fiscal 2025, up from a previous range of 1% to 2%, defying earlier projections of a potential 2.9% decline.
Levi’s also lifted its earnings outlook to between $1.27 and $1.32 per share, compared with prior guidance of $1.25 to $1.30. Gross margin is now forecast to rise by 1 percentage point for the year, assuming tariffs on imports remain unchanged.
Operating margin is expected to range between 11.4% and 11.6%, in line with analyst expectations.
Singh emphasized that Levi’s is maintaining a “prudent and conservative approach” amid global economic uncertainty, even as the company regains its footing after tariff-related pressures earlier this year.
Women’s Fashion, Tops Drive New Growth
Under Gass’s leadership, Levi’s has been broadening its product mix beyond traditional denim jeans. During the quarter, sales of women’s apparel rose 9%, while tops — including shirts and jackets — now represent nearly 40% of total sales.
Direct-to-consumer revenue jumped 11%, led by strength in the U.S. and digital channels. The company said diversifying its assortment helps protect against changing fashion trends and keeps Levi’s relevant to younger, style-conscious shoppers.
Gass said the company remains committed to innovation and value:
“We know consumers expect both durability and authenticity from Levi’s. That trust is what allows us to make bold moves without losing loyalty.”
With its strong brand identity, expanding product base, and growing DTC presence, Levi’s appears well positioned to maintain profitability even as global retail conditions remain unpredictable.
