April 7 (Reuters) - Levi Strauss LEVI.N on Tuesday raised its annual sales and profit forecasts after beating first-quarter estimates, as resilient demand for its premium denims and strength in its direct-to-consumer business helped offset a hit from U.S. tariffs.
The jeans maker has been working to blunt the impact of higher U.S. import duties through a mix of price hikes, cost controls, supplier negotiations and a diversified sourcing base that is less reliant on China.
In January, the company said it expected a 150-basis-point hit to fiscal 2026 margins or roughly $100 million, which it planned to fully offset.
Levi now expects fiscal 2026 net revenue growth in the range of 5.5% to 6.5%, compared with its prior forecast of a 5% to 6% rise. Analysts, on average, had expected a growth of 5.7%, according to data compiled by LSEG.
The company raised its forecast for annual adjusted earnings per share to a range of $1.42 to $1.48 from with its prior outlook between $1.40 and $1.46.
The upbeat outlook adds to signs that demand for core denim categories remains resilient, especially at the premium end of the market, despite pressure on budgets of low- and middle-income households.
Its premium denim line Blue Tab, non-denim men's bottoms, and women's denim skirts and dresses had been selling well, finance chief Harmit Singh said at an industry conference earlier this year.
Levi also topped Wall Street estimates for first-quarter sales and profit, driven by a 9% jump in sales in its largest market, the Americas. Europe posted a 24% increase, while Asia sales rose 13%.
Comparable sales at its direct-to-consumer channel, a higher margin segment that includes Levi's website and stores, rose 7% in the quarter ended March 1.
Net revenue rose 14% to $1.74 billion for the quarter, beating analysts' average estimate of $1.65 billion. It posted an adjusted earnings of 42 cents per share, compared with 38 cents a year earlier.
The strong results echo those of Abercrombie & Fitch ANF.N and Gap GAP.N, who have also noted in recent quarters that shoppers continue to spend on staple wardrobe items such as jeans.
(Reporting by Savyata Mishra in Bengaluru; Editing by Leroy Leo)
((Savyata.Mishra@thomsonreuters.com;))
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