Levi Strauss increased its adjusted earnings per share guidance for the full fiscal year to a range of $1.54 to $1.56, up from the previous range of $1.46 to $1.52. The company attributed the higher profit outlook primarily to tariff refunds received during the period. However, the retailer tempered investor expectations by reducing its net revenue growth forecast to 7%, moving to the lower end of its previously stated range of 7% to 7.5% growth.
During its fiscal third quarter, the denim manufacturer reported net revenues of $1.61 billion, representing approximately 4% growth compared to $1.54 billion in the prior year period. In the Americas region, net revenues increased 4%, though U.S. revenue declined 1%. The company’s operating margin reached 13.8% for the quarter, a significant improvement from 10.8% in the same period the previous year, with tariff refunds contributing 4.9 percentage points to both operating margin and gross margin. Net income for the quarter declined to $168.6 million, or 43 cents per share, from $218.1 million, or 55 cents per share, year-over-year.
Tariff refunds provided a 16-cent benefit to earnings per share, of which 5 cents were allocated back into business operations. Chief Executive Michelle Gass indicated this redeployed funding would support marketing and promotional activities during the holiday selling season. The company’s direct-to-consumer segment generated net revenue growth of 2% during the quarter, though comparable sales remained essentially flat. Direct-to-consumer operations represented 45% of total net revenue, while wholesale revenues increased 6% for the period.
Gass acknowledged that direct-to-consumer performance disappointed relative to internal expectations and stated the company had identified specific areas requiring improvement and implemented targeted corrective measures. Organic revenue, which excludes foreign exchange fluctuations, is expected to rise 6% for the full year, representing the upper end of the company’s prior guidance range. Share price declined approximately 4% following the announcement.
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