Levi Strauss Beats Q3 Estimates, Lifts Full-Year Outlook
Strong direct-to-consumer sales fuel 7% revenue growth, but shares dip in after-hours trading on a cautious Q4 forecast.
Levi Strauss & Co. (NYSE: LEVI) reported strong third-quarter financial results, surpassing analyst expectations for revenue and profit and raising its full-year guidance. The performance was driven by a significant strategic pivot to a direct-to-consumer (DTC) model, though the company's stock dipped in after-hours trading following a cautious outlook for the fourth quarter.
The iconic denim maker announced adjusted diluted earnings per share of $0.34, beating the consensus estimate of $0.31. Revenue for the quarter rose 7% to $1.5 billion, also ahead of Wall Street forecasts. Buoyed by the results, Levi's lifted its full-year net revenue growth outlook to approximately 3% and raised its adjusted diluted EPS guidance to a range of $1.27 to $1.32.
The quarter's success highlights the effectiveness of the company's ongoing transformation. "We delivered another very strong quarter as our pivot to becoming a DTC-first, head-to-toe denim lifestyle retailer is driving a meaningful inflection in our financial performance," said Michelle Gass, President and CEO, in the . Direct-to-consumer net revenues surged by 11%, with e-commerce sales climbing 18%.
Despite the positive results and upgraded forecast, the company's shares fell in after-hours trading. The dip appeared to be a reaction to a more tempered outlook for the upcoming fourth quarter. During the earnings call, Chief Financial and Growth Officer Harmit Singh noted that he expects gross margins to contract slightly in Q4 due to ongoing tariffs. Furthermore, by about 3% due to prior decisions to exit its footwear business and the Denizen jeans brand.
This strategic pruning, while impacting short-term sales figures, is part of the company's broader effort to focus on its core, higher-margin denim business. The , with the Americas region growing 6%, Europe up 5%, and Asia leading with 12% growth. The successful quarter showcases the brand's enduring power and management's ability to navigate a complex retail environment by focusing on its most profitable channels and markets.