Key Highlights
- Q2 adjusted earnings per share reached $0.28, surpassing analyst expectations of $0.24
- Quarterly revenue climbed to $1.56 billion, an 8% year-over-year increase, exceeding the $1.52 billion projection
- Company upgraded full-year EPS forecast to $1.46–$1.52 and revenue growth expectations to 7%–7.5%
- Cash dividend increased 14% to $0.16 per share, marking the fourth consecutive year of increases
- Despite positive results, LEVI shares declined over 5% during after-hours trading
Levi Strauss delivered better-than-expected second-quarter results on Wednesday, upgraded its annual outlook, and announced a dividend hike — yet shares tumbled more than 5% when extended trading commenced.
For the quarter that concluded on May 31, the iconic denim manufacturer reported adjusted earnings of $0.28 per share, exceeding the Street’s $0.24 estimate. Quarterly sales totaled $1.56 billion, representing an 8% annual increase and beating forecasts of $1.52 billion. Operating profit from continuing operations reached $95 million, compared to $80 million in the same period last year.
The after-hours decline represents a textbook “buy the rumor, sell the news” scenario. Market participants had anticipated a more aggressive guidance revision, and the updated EPS projection of $1.46–$1.52 came in slightly below the Street’s $1.51 midpoint consensus.
Prior to the announcement on July 9, LEVI shares had climbed approximately 1% during regular trading hours. Year-over-year, the stock has appreciated 24%.
Performance Across Regions and Channels
Growth was broad-based across all geographic markets. The Americas segment generated $815 million in revenue, rising 9%, with U.S. sales increasing 5%. European operations contributed $420 million, up 4%, though organic growth declined 1% due to a distribution center timing adjustment from the previous year. The Asia region delivered $284 million, representing 10% growth. The Beyond Yoga brand contributed $43 million, jumping 16%.
Direct-to-consumer sales, which now represent 51% of total revenue, expanded 11%. Digital commerce specifically surged 19%. Wholesale channels posted 5% growth.
CEO Michelle Gass told CNBC that approximately two-thirds of the revenue expansion came from increased unit volume rather than pricing adjustments. She characterized the company’s primary customer base as remaining resilient.
CFO Harmit Singh highlighted improved gross profit margins and disciplined expense management as the primary factors driving enhanced profitability.
Forward Outlook and Shareholder Returns
For the fiscal year ending November 29, Levi increased its revenue growth projection to 7%–7.5%, up from the previous 5.5%–6.5% estimate. The adjusted EPS forecast was elevated to $1.46–$1.52, compared to the prior $1.42–$1.48 range.
Management’s projections incorporate assumptions that tariffs on Chinese goods remain at 30% for U.S. imports and 20% for other markets.
The company boosted its quarterly cash dividend to $0.16 per share, representing a 14% jump from the prior $0.14 distribution. At current prices, this translates to an approximate 2.50% yield. The dividend will be paid on August 5 to shareholders of record as of July 22.
This represents the fourth consecutive annual dividend increase following a suspension of hikes during the pandemic period.
Currently, eleven Wall Street analysts maintain a Strong Buy rating on LEVI stock, with nine additional Buy ratings and two Hold recommendations. The consensus price target of $28.09 suggests approximately 14% potential upside from present trading levels.
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