Levi Strauss Lifts Full-Year Guidance After Second-Quarter Profit Growth
The denim maker raised its full-year adjusted EPS outlook to $1.46 to $1.52, citing broad-based demand and margin gains.
Levi Strauss & Co. (LEVI) reported second-quarter adjusted diluted earnings of $0.28 a share, up 27% from a year earlier, as the denim maker raised its full-year profit and revenue guidance for the third consecutive quarter.
The results marked a moderation from the prior quarter's pace — net revenue growth slowed to 8% from 14% in the first quarter, and organic growth eased to 6% from 9% — but the company signaled confidence in the durability of the cycle by lifting its full-year adjusted EPS range to $1.46 to $1.52, up from $1.42 to $1.48 set three months ago.
Gross margin expanded 10 basis points year-over-year to 62.7%, a reversal from the 20-basis-point contraction recorded in the first quarter when tariff costs weighed on profitability. Adjusted EBIT margin reached 9.0%, up 70 basis points from a year ago, helped by a sharp deceleration in adjusted SG&A growth to 6.5% from 15.7% in the first quarter, which had been inflated by the launch of the Behind Every Original marketing campaign.
Regionally, the Americas held steady at 9% reported growth and 7% organic growth, matching the first quarter's pace. Asia delivered 10% reported and 12% organic growth, with operating income surging 44% to $43 million. Europe was the outlier: reported revenue grew just 4% and organic revenue declined 1%, a sharp pullback from the first quarter's 24% reported and 10% organic gains, which the company attributed to year-ago comparison distortions tied to a distribution-center transition. Still, Europe's operating income rose 28% to $89 million, suggesting the top-line softness was more timing than structural.
Direct-to-consumer sales grew 11% reported and 8% organically, decelerating from 16% and 10% in the first quarter, while comparable-store growth slipped to 6% from 7%. E-commerce remained a bright spot, with revenue up 19% reported and 17% organic, roughly flat with the prior quarter's pace. Wholesale growth slowed more sharply, to 5% reported and 3% organic, down from 12% and 8%. Beyond Yoga, the company's athleisure brand, grew 16%, easing from 23% in the first quarter, though its operating loss narrowed 47% to $2 million.
Inventories fell 7% year-over-year, a reversal from the 4% increase in the first quarter and the 9% build at the end of fiscal 2025, giving the company a cleaner balance sheet heading into the back half. Cash and equivalents rose to $849 million from $717 million at the end of the first quarter.
Management raised full-year reported net revenue guidance to growth of 7.0% to 7.5%, up from 5.5% to 6.5%, and lifted organic revenue guidance to 5.5% to 6.0% from 4.5% to 5.5%. Gross margin guidance was raised to up 10 basis points versus the prior year, improved from a flat-to-slightly-up outlook, while adjusted EBIT margin guidance was refined to 12%, up 60 basis points year-over-year.
The board increased the quarterly dividend 14% to $0.16 a share from $0.14, the second increase in two quarters. A $200 million accelerated share repurchase launched in the first quarter is expected to settle in the third quarter, with $240 million remaining under the existing authorization.