Key facts
- Levi Strauss raised its annual net sales forecast for fiscal 2026 to 7.0%-7.5% growth.
- Second-quarter net revenue increased 8% to $1.56 billion, surpassing analyst estimates.
- Adjusted earnings per share for the second quarter were 28 cents, beating expectations.
- The company's direct-to-consumer business and expansion beyond denim are contributing to growth.
- Sales in the Americas rose 9%, Europe saw a 4% increase, and Asia sales jumped 10% in the quarter.
Levi Strauss raised its annual net sales forecast on Wednesday, anticipating continued demand for its denim and apparel products despite broader economic uncertainties affecting consumer spending. The San Francisco-based company exceeded Wall Street's expectations for second-quarter sales, driven by strong performance in denim and casual wear, particularly among younger consumers.
In the second quarter ended May 31, Levi's net revenue climbed 8% to $1.56 billion, surpassing the $1.52 billion estimated by analysts. Adjusted earnings of 28 cents per share also beat the 24 cents forecast. The company now projects fiscal 2026 net revenue to grow between 7.0% and 7.5%, an increase from its previous forecast of 5.5% to 6.5% growth. Analysts, on average, anticipate a 6.6% rise to $6.70 billion.
Levi's also revised its adjusted earnings per share guidance upward to a range of $1.46 to $1.52, from its prior projection of $1.42 to $1.48. CEO Michelle Gass stated that the ongoing sales growth is evidence of effective strategies and execution, highlighting the company's evolution into a direct-to-consumer-first, denim lifestyle brand with a larger addressable market, leading to faster growth and higher profitability.
The company has been expanding its product lines beyond denim into items like dresses, skirts, and tops, while investing significantly in its higher-margin direct-to-consumer business. This strategy has reportedly helped rebuild momentum, with revenue increasing each quarter for the past two years. Levi's has also diversified its sourcing to mitigate tariff pressures.
In the Americas, Levi's largest market, sales increased by 9% during the quarter. Europe saw a 4% rise, and Asia experienced a 10% jump in sales. The company's finance chief, Harmit Singh, is set to retire after approximately 13 years in the role, and will remain until a successor is appointed. Singh previously noted that the company's Middle East business, representing less than 1% of total sales, has had no significant impact from current regional disruptions.