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 prior range of $1.46 to $1.52, primarily supported by tariff refunds received during the period. The upward revision came despite analyst expectations that had centered on a range between $1.52 and $1.59.
However, the company adopted a more cautious stance on revenue growth, lowering its full-year net revenue growth guidance to 7%, representing the lower end of its previously stated range of 7% to 7.5%. The company did note that organic revenue growth, which excludes the impact of foreign exchange fluctuations, is expected to reach 6% for the year, representing the upper end of its prior outlook. Stock markets reacted negatively to the announcement, with share prices declining nearly 4% during the following trading session.
In its third quarter results, the denim retailer reported net revenue increases of approximately 4%, reaching $1.61 billion compared with $1.54 billion in the prior-year period. The Americas region posted a 4% revenue increase, though U.S. revenues specifically declined 1%. Operating margins expanded to 13.8% from 10.8% year-over-year, with tariff refunds contributing substantially to this improvement. The tariff benefit amounted to 4.9 percentage points of both operating and gross margins, with an additional 16-cent per-share earnings contribution, of which 5 cents were directed toward holiday marketing and promotional activities.
Direct-to-consumer net revenues grew 2% during the quarter while comparable sales remained essentially flat. Chief Executive Officer Michelle Gass acknowledged that direct-to-consumer performance fell below internal expectations and stated the company had implemented targeted corrective measures. The direct-to-consumer segment represented 45% of total net revenue. In contrast, wholesale revenues increased 6% for the quarter. The company also announced that John Vandemore will assume the chief financial officer role effective Nov. 1, replacing Harmit Singh following his retirement announcement in April.
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