Levi Strauss announced revised financial guidance following its third-quarter earnings report, with mixed signals about the company’s near-term trajectory. The denim retailer increased its adjusted earnings per share forecast for the full fiscal year to a range of $1.54 to $1.56, up from the prior guidance of $1.46 to $1.52. However, this improvement was largely attributable to tariff refunds rather than operational performance, and the company simultaneously lowered its net revenue growth guidance to 7%, representing the bottom end of its previously stated range of 7% to 7.5%.
For the three-month period ending August 30, Levi reported net sales of $1.61 billion, representing roughly 4% growth compared to $1.54 billion in the prior-year quarter. Net income declined to $168.6 million, or 43 cents per share, from $218.1 million, or 55 cents per share, year-over-year. The company’s operating margin reached 13.8% for the quarter, compared to 10.8% in the same period last year, with tariff refunds contributing 4.9 percentage points to both operating margin and gross margin. Tariff refunds also provided a 16-cent benefit to earnings per share, of which 5 cents were allocated toward marketing and promotional spending during the holiday season.
Operational results showed uneven performance across business segments. The Americas region posted net revenue growth of 4%, though U.S. revenue specifically declined 1%. Direct-to-consumer revenues increased 2% for the quarter with comparable sales remaining roughly flat, while comprising 45% of total net revenue. Wholesale revenues performed better, rising 6% during the quarter. Chief Executive Michelle Gass acknowledged that direct-to-consumer results fell below expectations and indicated the company had already implemented targeted actions to address performance issues.
Market reaction to the announcement was negative, with Levi shares declining nearly 4% on Thursday. Wall Street analysts had expected adjusted earnings per share guidance in the range of $1.52 to $1.59. Additionally, the company announced that John Vandemore will assume the role of chief financial officer effective November 1, succeeding Harmit Singh, who announced his retirement in April.
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