Jeans maker raises its full-year outlook for the second straight time, but shares fall after hours
Levi Strauss reported quarterly earnings on Wednesday.
The Iran war might be keeping consumers worried. But denim giant Levi Strauss's optimism remained intact on Wednesday, helped by gains in tops and women's clothing and high hopes for what it is calling "denim luxury."
CEO Michelle Gass, during Levi's $(LEVI)$ earnings call, said that sales of tops were up 5% during its second quarter, which ran through May. She said growth in newer items like blouses, sweaters and polos had outpaced "legacy" items, like graphic T-shirts. Sales of women's clothing jumped 11%.
She also said that Levi's premium Blue Tab jeans - whose prices get close to $300 - had helped it pick up a bigger slice of the market for high-end denim. And she said that the company now sees a bigger opportunity in the luxury space, with sales in that category rising 40% during the quarter.
"It's a relatively small business today, but there's no reason why this can't be $100 million, $200 million-plus over time," she said.
Jeans remain the core of Levi's business, and skinny, slim, bootcut and straight fits still make up the bulk of its bottoms segment. But looser fits also continued to put up sales gains, and Gass said consumers had shown the company that it could be much more than jeans.
"We're learning that it doesn't have to be just denim and denim bottoms," she said.
Management said that Levi's customers - across genders and geographies - had remained "resilient," amid concerns about putting off clothing purchases or waiting for discounts as costs of living rise. Still, Gass said the company expects demand for its cheaper Signature denim line to accelerate in the latter half of the year.
The company has tried to offer more products beyond jeans - such as dresses, blouses and other items geared toward women - as well as modern riffs on old favorites like 501s. It has also tried to sell more products itself, through its own physical and online stores. Those sales made up 51% of Levi's revenue overall during its fiscal second quarter.
Levi's on Wednesday also raised its full-year outlook for the second straight time and increased its quarterly dividend. However, investors appeared skeptical. Shares of Levi's were down 6% after the bell.
As of the close, Levi's stock was trading at around $24, and was up 17.5% so far this year. The stock is still off of highs reached in 2021.
Wednesday's stock drop also came as fresh tensions between the U.S. and Iran rattled major indexes, after President Donald Trump said he believed the cease-fire agreement with Iran was likely "over," and the U.S. carried out new strikes on Iran.
Levi's raised its full fiscal-year sales outlook to gains of between 7% and 7.5%, up from prior expectations of 5.5% to 6.5% growth. The new forecast was above analysts' expectations for a 6.6% increase. Levi's fiscal year ends on Nov. 29.
Management said it now expects adjusted earnings per share of $1.46 to $1.52, compared with prior expectations for $1.42 to $1.48. The midpoint of the range given on Wednesday was still a bit below FactSet estimates for $1.51.
That outlook assumed "no significant worsening of macro-economic pressures on the consumer."
Levi's also said it had declared a dividend of 16 cents a share, a 14% increase over the prior year.
In April, Levi's also raised its outlook, despite concerns about higher gas prices due to the Iran war and their impact on spending. Along with pushing gas prices higher, the war has also pushed up costs for materials like polyester.
Shortly after the war began in late February, Chief Financial Officer Harmit Singh said the Middle East comprised less than 1% of Levi's total business. He added that the amount of product it got via the Strait of Hormuz was "very, very minor."
For Levi's fiscal second quarter, which ran through May, revenue rose 8% to $1.56 billion, with gains in the Americas, Europe and Asia. The company reported adjusted earnings of 28 cents a share. Margins ticked higher.
Analysts polled by FactSet expected adjusted earnings per share of 24 cents for the company's second quarter. They expected sales of $1.52 billion.
-Bill Peters
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 08, 2026 19:10 ET (23:10 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments