Key Highlights
- Q2 adjusted earnings per share reached $0.28, surpassing analyst expectations of $0.24
- Quarterly revenue climbed to $1.56 billion, representing 8% year-over-year growth and exceeding the $1.52 billion projection
- Company elevated full-year EPS forecast to $1.46–$1.52 range; revenue growth projection increased to 7%–7.5%
- Quarterly cash dividend boosted 14% to $0.16 per share, marking the fourth consecutive year of increases
- Shares of LEVI declined over 5% during extended trading hours following the earnings announcement
Despite delivering impressive second-quarter results that topped analyst projections and announcing an enhanced full-year outlook along with a dividend increase, Levi Strauss shares tumbled more than 5% in Wednesday’s after-hours session.
The denim giant reported adjusted earnings of $0.28 per share for the period concluding May 31, exceeding Wall Street’s $0.24 projection. Total revenue reached $1.56 billion, marking an 8% year-over-year increase and beating the anticipated $1.52 billion. Continuing operations generated $95 million in profit, compared to $80 million during the same quarter last year.
The negative after-hours movement exemplifies the traditional “buy the rumor, sell the news” phenomenon. Market participants apparently anticipated a more substantial guidance revision, and the updated EPS forecast of $1.46–$1.52 fell short of the $1.51 analyst consensus at its midpoint.
Throughout regular trading on July 9, LEVI shares edged up approximately 1%. Over the trailing twelve months, the stock has appreciated 24%.
Performance Across Geographies and Sales Channels
All geographic segments delivered positive results. The Americas segment generated $815 million in revenue, climbing 9%, with U.S. operations contributing 5% growth. The European region produced $420 million, up 4%, though organic revenue declined 1% due to a distribution center realignment from the previous year. Asian markets contributed $284 million, jumping 10%. The Beyond Yoga brand line delivered $43 million, surging 16%.
Direct-to-consumer operations, which now account for 51% of total revenue, expanded 11%. Digital commerce specifically accelerated 19%. The wholesale segment increased 5%.
CEO Michelle Gass told CNBC that volume increases, rather than pricing adjustments, accounted for approximately two-thirds of the revenue expansion. She characterized the company’s primary customer base as remaining financially stable.
CFO Harmit Singh highlighted improved gross profit margins and expense management as the primary contributors to enhanced bottom-line performance.
Updated Projections and Shareholder Returns
For the complete fiscal year concluding November 29, Levi elevated its revenue growth expectation to 7%–7.5%, up from the previous 5.5%–6.5% forecast. The adjusted EPS outlook was increased to $1.46–$1.52, compared to the prior $1.42–$1.48 range.
Management’s guidance incorporates assumptions of 30% U.S. tariffs on Chinese goods and 20% tariffs on imports from other countries.
The quarterly cash distribution was increased to $0.16 per share, representing a 14% boost from the prior $0.14 payment. This adjustment brings LEVI’s yield to approximately 2.50%. The dividend will be distributed on August 5 to shareholders of record as of July 22.
This represents the fourth consecutive annual dividend enhancement following a suspension during the COVID-19 pandemic period.
Current Wall Street coverage includes eleven Strong Buy ratings, nine Buy recommendations, and two Hold ratings for LEVI. The consensus price target of $28.09 suggests potential upside of roughly 14% from present trading levels.
