Key Takeaways:
- Revenue of $1.56B topped the $1.52B consensus, rising 8% year over year
- DTC revenue share reached 51% for the first time, surpassing wholesale
- Full-year sales growth guidance raised to 7%-7.5% from 5.5%-6.5%
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Levi Strauss tops Q2 estimates, lifts sales guidance to 7.5%
Levi Strauss reported Q2 revenue of $1.56B, beating estimates, and raised its full-year sales growth guidance to as much as 7.5%.
"Our demand remains healthy," Chief Executive Officer Michelle Gass said, adding that about two-thirds of the quarter's sales growth came from unit volume rather than higher prices.
The denim maker posted adjusted earnings of 28 cents a share, topping the 24-cent consensus. Net income rose to $87.3M from $67M a year earlier. Direct-to-consumer revenue grew 11% to account for 51% of total sales, the first time DTC has exceeded the wholesale channel. E-commerce revenue jumped 19%.
Levi now expects full-year sales growth of 7% to 7.5%, up from a prior range of 5.5% to 6.5%. Adjusted EPS is forecast at $1.46 to $1.52, compared with an earlier outlook of $1.42 to $1.48. About half of the revenue growth is expected from price increases and half from unit sales, Chief Financial Officer Harmit Singh said.
Asia led regional performance with organic revenue growth of 12%. The company has factored a 30% US tariff on Chinese imports into its financial projections and is shifting sourcing away from China to mitigate the impact. Gross margin edged up 10 basis points to 62.7%, supported by lower product costs and pricing actions, partly offset by currency headwinds and tariff costs.
The guidance raise signals management expects consumer demand for denim to hold up despite a mixed retail environment. Investors will watch the next quarterly report for updates on DTC margin expansion and the pace of sourcing diversification.
This article is for informational purposes only and does not constitute investment advice.