Levi Strauss Raises Full-Year Earnings Outlook Despite Slower U.S. Sales Growth

Levi Strauss & Co. Class A (NYSE:LEVI) reported third-quarter revenue of $1.61 billion, up 4% year over year, while expanding gross margins to 66.2%. The apparel maker raised its full-year adjusted earnings guidance to between $1.54 and $1.56 per share, supported by $79 million in customs duty refunds. However, the company trimmed its full-year revenue growth outlook to approximately 7% as domestic sales dipped 1%.

Profitability gained a substantial boost from tariff refunds, helping adjusted EBIT margin reach 15.5%. Direct-to-consumer sales grew 2% to make up 45% of total revenue, boosted by a 10% gain in e-commerce. Despite growing competition across the denim category, the company captured market share in U.S. men's and women's jeans and saw demand bounce back in Asia, including a 13% sales rebound in China. Levi Strauss & Co. Class A also launched a $100 million accelerated share repurchase program and resumed a $0.16 per share dividend.

Investors will be watching how executive changes and marketing efforts affect performance heading into the end of the year. John Vandemore will step in as executive vice president and chief financial officer on November 1. Management is also reallocating roughly $60 million of its marketing budget toward promotions and brand campaigns to navigate soft U.S. demand and heightened market competition.