Levi Strauss & Co. (LEVI) is stepping confidently into the second half of 2025.
Earnings Surprise and Revenue Strength Spark Rally
For the quarter ended June 1, Levi Strauss delivered net revenues of $1.45 billion, up 6% year over year and comfortably above the $1.37 billion consensus estimate. Adjusted earnings per share more than doubled expectations, coming in at $0.22 versus Wall Street’s projection of $0.13.
The strength was broad-based. Direct-to-consumer sales rose 11%, fueled by strong performance in Levi’s owned stores and e-commerce, while the wholesale business grew 3%, posting its third straight quarter of growth. Women's apparel, international markets, and new lifestyle categories all contributed to the upside.
Levi’s gross margin expanded by 140 basis points to 62.6%, benefiting from lower product costs and a more profitable channel mix. Net income surged to $80 million, up from $17 million a year earlier, reflecting both operational efficiency and brand momentum.
Upgraded Guidance Defies Tariff Concerns
What caught Wall Street’s attention even more than the earnings beat was the shift in guidance. The company now expects full-year revenue growth between 1% and 2%, a meaningful improvement from the prior expectation of a 1%–2% decline. Adjusted EPS is now forecast between $1.25 and $1.30, above earlier projections and analyst consensus.
This optimistic outlook comes despite the assumption that U.S. tariffs on Chinese imports will remain at 30%, and tariffs from other regions will stay at 10% for the remainder of the year. Notably, Levi has dramatically reduced its exposure to China over the past five years—from 15-16% of U.S. imports in 2018 to just 1% today—thanks to an increasingly diversified supply chain spanning 20 countries.
“Our performance shows that even in a tough tariff environment, we have pricing power, supply chain agility, and operational discipline,” said CFO and growth officer Harmit Singh. The company estimates tariff-related profit headwinds of $25 million to $30 million for the year, but said mitigation efforts such as targeted price increases and early inventory importing have helped soften the blow.
From Denim to Lifestyle: Strategic Transformation in Motion
CEO Michelle Gass, who took over in early 2024, has been steering Levi through a transformation from a denim-led heritage brand into a modern lifestyle apparel company. Her strategy centers on two pillars: doubling down on the Levi’s brand and shifting to a direct-to-consumer (DTC) business model.
That strategy is clearly gaining traction. DTC now represents more than 50% of Levi’s revenue, delivering high-single-digit comp growth and stronger margins. The company is also expanding into tops, dresses, outerwear, and accessories, supported by celebrity partnerships and event marketing. From Beyoncé’s Cowboy Carter Tour to sponsorships at Coachella and Primavera Sound, Levi’s has leaned heavily on cultural cachet—and it's paying off.
The company is also shedding non-core assets to sharpen its focus. It sold Dockers to Authentic Brands Group for $311 million and has exited its Denizen and footwear businesses.
A Brand Reclaiming Its Momentum
After years of sluggish performance and strategic questions, Levi Strauss appears to be rounding the corner. With revenue growth returning, margins improving, and investor confidence surging, the company is making the case that its shift toward premium positioning, lifestyle branding, and DTC execution is more than just aspirational.
Tariffs remain a risk, and consumer sentiment is still fragile, but for now, Levi’s execution speaks louder than the macro noise. The iconic brand isn’t just surviving—it’s back in fashion with both consumers and Wall Street.
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