Levi Strauss On Wednesday, it raised its profit outlook after receiving tariff refunds, but gave a less optimistic revenue forecast.
The jeans retailer raised its forecast for adjusted earnings per share for the full fiscal year to between $1.54 and $1.56, up from a previous range of $1.46 to $1.52. Analysts expected a range between $1.52 and $1.59, according to LSEG.
The company also lowered its full-year net revenue growth forecast to 7%, the low end of its previously provided range of a 7% to 7.5% increase.
Shares of Levi remained roughly flat in extended trading after initially rising.
For its fiscal third quarter, the denim retailer said it saw a 4% increase in net revenue in the Americas, although U.S. revenue declined 1%. It also reported an operating margin of 13.8% for the quarter, compared to 10.8% in the same quarter last year, driven by tariff reimbursements which contributed 4.9% to the operating margin and gross margin.
Levi also said its duty refunds contributed to a profit of 16 cents to its earnings per share, of which 5 cents was “reallocated to support the business.” He did not specify how he invested the money.
Here’s Levi’s third-quarter performance compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: 48 cents adjusted, it’s unclear how this figure compares to the 36 cents expected by Wall Street
- Income: $1.61 billion versus $1.62 billion expected
For the three months ending Aug. 30, Levi reported net income of $168.6 million, or 43 cents per share, down from $218.1 million, or 55 cents per share, a year earlier.
Sales rose about 4% to $1.61 billion from $1.54 billion last year.
Levi said direct-to-consumer net revenue rose 2% in the quarter, but comparable sales remained roughly flat. DTC accounted for 45% of total net revenue in the third quarter, the company said. In contrast, wholesale revenue increased 6% for the quarter.
“While our direct-to-consumer business fell short of our internal expectations, we moved quickly to close this shortfall and are encouraged by the strength we are seeing heading into the holiday season, including in the United States,” CEO Michelle Gass said in a statement. “Based on accelerating recent trends, our DTC business is on track to deliver mid-single-digit growth in the fourth quarter.”
The company previously said it saw broad-based growth across all of its business segments, including its core Levi’s and its premium Blue Tab.
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