A Levi Strauss store in New York City in 2019.Brendan McDermid/Reuters
Levi Strauss LEVI-N on Tuesday raised its annual sales and profit forecasts after beating first-quarter estimates, as resilient demand for its premium denims and strength in its direct-to-consumer business helped offset a hit from U.S. tariffs.
The jeans maker has been working to blunt the impact of higher U.S. import duties through a mix of price hikes, cost controls, supplier negotiations and a diversified sourcing base that is less reliant on China.
In January, the company said it expected a 150-basis-point hit to fiscal 2026 margins or roughly US$100-million, which it planned to fully offset.
Levi now expects fiscal 2026 net revenue growth in the range of 5.5 per cent to 6.5 per cent, compared with its prior forecast of a 5-per-cent to 6-per-cent rise. Analysts, on average, had expected a growth of 5.7 per cent, according to data compiled by LSEG.
The company raised its forecast for annual adjusted earnings per share to a range of US$1.42 to US$1.48 from with its prior outlook between US$1.40 and US$1.46.
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The upbeat outlook adds to signs that demand for core denim categories remains resilient, especially at the premium end of the market, despite pressure on budgets of low- and middle-income households.
Its premium denim line Blue Tab, non-denim men’s bottoms, and women’s denim skirts and dresses had been selling well, finance chief Harmit Singh said at an industry conference earlier this year.
Levi also topped Wall Street estimates for first-quarter sales and profit, driven by a 9-per-cent jump in sales in its largest market, the Americas. Europe posted a 24-per-cent increase, while Asia sales rose 13 per cent.
Comparable sales at its direct-to-consumer channel, a higher margin segment that includes Levi’s website and stores, rose 7 per cent in the quarter ended March 1.
Net revenue rose 14 per cent to US$1.74-billion for the quarter, beating analysts’ average estimate of US$1.65-billion. It posted an adjusted earnings of 42 US cents per share, compared with 38 US cents a year earlier.
The strong results echo those of Abercrombie & Fitch and Gap, who have also noted in recent quarters that shoppers continue to spend on staple wardrobe items such as jeans.