Levi Strauss announced adjusted guidance for its fiscal year results on Wednesday, raising earnings per share expectations while tempering revenue projections. The apparel company increased its adjusted earnings per share outlook to a range of $1.54 to $1.56, up from the prior range of $1.46 to $1.52. The revision was driven primarily by tariff refunds received by the company. However, Levi lowered its net revenue growth guidance for the full year to 7%, representing the lower end of its previously communicated 7% to 7.5% range. The company noted that organic revenue, which excludes currency fluctuations, is expected to grow 6%, matching the high end of its previous projection.
For the fiscal third quarter ending Aug. 30, Levi reported net revenues of $1.61 billion, representing approximately 4% growth compared to $1.54 billion in the prior-year period. Net income declined to $168.6 million, or 43 cents per share, from $218.1 million, or 55 cents per share, in the same quarter last year. The Americas region saw a 4% increase in net revenues, though domestic U.S. sales declined 1%. Operating margin expanded to 13.8% from 10.8% year-over-year, substantially supported by tariff refunds that contributed 4.9% to both operating and gross margins.
Tariff-related benefits had a significant impact on profitability metrics. The company reported that tariff refunds provided a 16-cent benefit to earnings per share, with 5 cents being reallocated to support business operations. Chief Executive Michelle Gass indicated on an analyst call that these redeployed funds would support marketing and promotional activities during the holiday shopping season.
Direct-to-consumer revenues increased 2% for the quarter, though comparable sales remained essentially flat. This channel represented 45% of total net revenue. Wholesale revenues increased 6% during the same period. Gass acknowledged that direct-to-consumer performance underperformed expectations and stated the company had identified specific areas needing improvement and had already implemented targeted remedial actions.
Stock market reaction was negative, with Levi shares declining nearly 4% on Thursday. Additionally, the company announced that John Vandemore will assume the chief financial officer role effective Nov. 1, succeeding Harmit Singh, who announced his retirement earlier this year.
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