Levi Strauss reported its fiscal Q3 2025 earnings, unveiling impressive growth despite rising tariffs. The company experienced a notable increase in profitability, thanks to strategic price adjustments and a shift toward direct-to-consumer sales.
Key Financial Highlights
The latest quarterly results exceeded Wall Street’s expectations:
- Earnings per Share: Adjusted earnings reached 34 cents, above the anticipated 31 cents.
- Revenue: Total revenue climbed to $1.54 billion, surpassing the expected $1.50 billion.
Levi’s gross margin improved to 61.7%, rising 1.1 percentage points from the previous year, and beating analysts’ expectations of 60.7%.
Strong Demand and Pricing Strategy
During an interview with CNBC, CEO Michelle Gass emphasized the company’s thoughtful approach to price increases. She noted that demand has remained strong despite these changes. Gass stated, “We’re taking a surgical, thoughtful approach on any pricing.” This strategy is aimed at maintaining the brand’s reputation for quality and value.
Finance chief Harmit Singh also highlighted that much of Levi’s revenue growth is driven by unit sales rather than price hikes. The company has reduced discounts and focused on selling directly through its own online and physical stores, which yield higher margins.
Updated Full-Year Outlook
Following this quarter’s success, Levi’s has raised its full-year sales expectation to a 3% increase, up from the previous guidance of 1% to 2%. This new forecast contrasts with initial expectations of a 2.9% decline. Adjusted earnings per share are now anticipated to range from $1.27 to $1.32, aligning closely with analyst predictions.
Operational Efficiency Amid Tariffs
Despite the impact of tariffs on imports, Levi’s aims to return to its original gross margin forecast, provided the 30% tariff on imports from China and the 20% duties on other imports remain unchanged. The company previously adjusted its gross margin expectations due to these tariffs.
Market Trends and Future Growth
Levi’s is not only focused on denim. The company is expanding its range of products to include more women’s clothing, which now constitutes nearly 40% of its business. During the quarter, direct-to-consumer sales grew by 11%, driven significantly by the U.S. market. Women’s apparel sales also saw a 9% increase, indicating a successful strategy to expand beyond traditional offerings.
As Levi Strauss continues to adapt to market conditions, its strategic pricing and focus on direct sales are poised to support ongoing growth, solidifying its position in the competitive apparel industry.
