Key Highlights
- Q2 adjusted earnings per share reached $0.28, surpassing Wall Street’s $0.24 projection
- Quarterly sales totaled $1.56 billion, reflecting 8% annual growth and exceeding the $1.52 billion estimate
- Company upgraded annual EPS forecast to $1.46–$1.52 range; revenue growth projection increased to 7%–7.5%
- Quarterly cash payout increased 14% to $0.16 per share, marking the fourth consecutive year of dividend growth
- Shares declined over 5% during after-hours trading session despite positive financial results
Levi Strauss delivered impressive second-quarter results on Wednesday that exceeded analyst projections across key metrics, upgraded its annual forecast, and increased shareholder returns — yet the market reacted negatively, sending shares down more than 5% after the closing bell.
For the fiscal quarter that concluded on May 31, the denim giant reported adjusted earnings of $0.28 per share, comfortably beating the Street’s $0.24 expectation. Quarterly sales reached $1.56 billion, representing an 8% increase compared to the same period last year and surpassing the anticipated $1.52 billion. Operating profit from continuing operations climbed to $95 million, compared with $80 million in the prior-year quarter.
The after-hours decline exemplifies a textbook “buy the rumor, sell the news” scenario. Market participants had apparently anticipated a more aggressive guidance increase, and the company’s updated EPS projection of $1.46–$1.52 fell slightly short of the Street’s $1.51 consensus at the midpoint.
During regular trading hours on July 9, LEVI shares edged up approximately 1%. The stock has appreciated 24% over the trailing twelve-month period.
Performance Across Geographies and Sales Channels
Growth was broad-based across all geographic segments. The Americas division generated $815 million in revenue, climbing 9% year-over-year, with the U.S. market contributing 5% growth. European operations delivered $420 million, a 4% increase, though organic revenue declined 1% due to a distribution center transition from the previous year. The Asia region produced $284 million, advancing 10%. The Beyond Yoga brand contributed $43 million, expanding 16%.
Direct-to-consumer operations, which now represent 51% of total net sales, expanded 11%. Digital commerce specifically surged 19%. Wholesale channels increased 5%.
CEO Michelle Gass noted during a CNBC interview that approximately two-thirds of the revenue expansion came from increased unit volume rather than pricing adjustments. She emphasized that the company’s primary customer base remains resilient.
CFO Harmit Singh highlighted that enhanced gross profit margins combined with disciplined expense management were the primary factors driving improved profitability.
Forward Outlook and Shareholder Returns
For the complete fiscal year concluding November 29, Levi elevated its revenue growth expectation to a range of 7%–7.5%, up from the previously announced 5.5%–6.5% target. The adjusted earnings per share outlook was similarly raised to $1.46–$1.52, compared to the prior $1.42–$1.48 range.
Management’s projections incorporate assumptions that U.S. tariffs on Chinese goods remain at 30% while tariffs on other international imports stay at 20%.
The company announced a quarterly dividend of $0.16 per share, representing a 14% boost from the previous $0.14 distribution. This translates to an approximate yield of 2.50%. The payment will be distributed on August 5 to shareholders of record as of July 22.
This dividend increase extends the company’s streak to four consecutive years of annual increases following a temporary suspension during the COVID-19 crisis.
Wall Street sentiment remains constructive, with eleven analysts assigning a Strong Buy rating, nine recommending Buy, and two maintaining Hold positions. The consensus price target of $28.09 suggests approximately 14% potential appreciation from current trading levels.
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