Levi Strauss has upped its profit forecast for the fiscal year, attributing the boost to tariff refunds. The company is cautious on revenue projections, however. Levi Strauss now expects adjusted earnings per share between $1.54 and $1.56, up from a previous estimate of $1.46 to $1.52. Analysts had predicted a slightly higher range of $1.52 to $1.59, based on LSEG data.
Despite an improved profit outlook, Levi Strauss has reduced its net revenue growth target. The company now aims for a 7% growth rate, the lower bound of its earlier guidance of 7% to 7.5%. Levi's shares remained steady in extended trading after an initial rise.
In the fiscal third quarter, Levi Strauss recorded a 4% increase in net revenues across the Americas. U. S. revenue, however, saw a slight decline, dropping 1%. The company reported an operating margin of 13.8% for the quarter, up from 10.8% in the same period last year. This margin improvement was largely due to tariff refunds, which added a 4.9% boost to both operating and gross margins.
Tariff refunds also contributed 16 cents to the company's earnings per share. Of this, 5 cents were allocated to marketing and promotions for the holiday season, as CEO Michelle Gass mentioned during an analyst call.
For the quarter ending August 30, Levi Strauss reported a net income of $168.6 million, or 43 cents per share, down from $218.1 million, or 55 cents per share, the previous year. Sales increased approximately 4% to $1.61 billion, up from $1.54 billion a year earlier. The company's direct-to-consumer (DTC) net revenues rose 2%, although comparable sales remained flat. DTC accounted for 45% of total net revenue in the third quarter.
Wholesale revenues grew by 6%. Despite the overall solid performance, Gass acknowledged that the DTC segment did not meet expectations. She emphasized that the company has identified areas for improvement and is already implementing targeted actions to enhance performance.
Levi Strauss has been experiencing broad-based growth across business segments, including its core Levi's brand and its premium blue tab line. In a leadership change, the company announced that John Vandemore will assume the role of chief financial officer on November 1. He will replace Harmit Singh, who announced his retirement in April.
