Levi Strauss & Co. elevated its full-year profit outlook on Tuesday, bolstered by a significant customs windfall and international momentum, even as softer domestic retail trends and unseasonably warm weather created headwinds during the third quarter.
The San Francisco-based apparel corporation now projects adjusted annual earnings of $1.54 to $1.56 per share, marking an upward revision from its previous bracket of $1.46 to $1.52 per share.
The financial adjustment follows the receipt of $79 million in refunds during the quarter ended Aug. 30, covering tariffs previously paid under the International Emergency Economic Powers Act.
Leadership disclosed plans to redeploy approximately $60 million of those recovered funds this year toward targeted promotional campaigns and brand marketing.
Financial performance for the third period reflected mixed operational currents with total net revenue climbed 4% to reach $1.61 billion, aligning closely with Wall Street consensus estimates compiled by LSEG of $1.62 billion.
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On an adjusted basis, the company delivered earnings of 48 cents per share, surpassing analyst projections that had hovered around 36 cents per share.
Furthermore, management tightened its annual organic revenue growth expectation to 6%, anchoring it at the top end of its prior 5.5% to 6% forecast range.
Despite the bottom-line strength, domestic retail execution encountered obstacles as comparable sales within the direct-to-consumer division remained flat for the quarter.
Chief Executive Officer Michelle Gass noted that the channel underperformed internal expectations due to softening sales across the United States, compounded by elevated fuel prices that independent retail consultant Bruce Winder noted continue to challenge domestic consumer spending.
In Europe, unseasonably warm autumn weather depressed store traffic. Gass also acknowledged a misstep in the U.S. back-to-school marketing strategy, which over-indexed on loose-fitting pants rather than aligning with consumer demand for popular low-rise silhouettes.
Even with the domestic and regional roadblocks, several product categories and global territories emerged as powerful drivers of resilience.
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The women’s apparel portfolio was the highlight, with items extending beyond traditional denim bottoms such as tops, skirts, and dresses accounting for roughly half of the quarter’s top-line growth.
Additionally, the Blue Tab premium denim line achieved double-digit growth as the brand successfully courts higher-income shoppers.
International markets also compensated for domestic sluggishness with Asian operations expanding significantly, catalyzed by a 13% sales increase in China and a high-profile brand collaboration with recording artist Rosé.
With inventory conditions optimized and holiday inventory arriving, executive leadership is banking on the reinvestment of the tariff refunds to reinvigorate retail momentum and secure steady year-end performance across its global wholesale and retail networks.