Levi Strauss raised its full-year profit outlook after tariff refunds gave its third-quarter results a substantial lift, even as the denim maker's revenue came in just shy of Wall Street's estimate.
The company reported $1.61 billion in quarterly revenue, up 4% from a year earlier. Analysts surveyed by LSEG had expected $1.62 billion, according to Reuters and CNBC. Adjusted earnings were 48 cents a share, above the roughly 36 cents analysts expected.
Refunds reshape the quarter
Levi received $79 million in refunds for tariffs paid under the International Emergency Economic Powers Act. The refunds added 16 cents a share to adjusted earnings, according to the company's quarterly results. Levi said it put 5 cents of that benefit back into the business during the quarter, leaving a net benefit of 11 cents a share.
The company now expects full-year adjusted earnings of $1.54 to $1.56 a share, up from its previous range of $1.46 to $1.52. It plans to reinvest about $60 million of the refunds this fiscal year, including roughly $35 million in the fourth quarter, in promotions, marketing and other business support.
The top-line outlook was more restrained. Levi set its reported revenue growth forecast at about 7%, the bottom of its previous 7% to 7.5% range. It raised its organic growth forecast to about 6%, the top of its previous 5.5% to 6% range.
Sales growth was uneven
Direct-to-consumer revenue rose 2%, but comparable sales in the channel were roughly flat. U.S. revenue declined 1%, while wholesale revenue grew 6% and e-commerce revenue rose 10%.
CEO Michelle Gass said the direct-to-consumer business fell short of the company's expectations. She said recent trends put the channel on track for mid-single-digit growth in the fourth quarter, a company projection that leans on stronger holiday demand.
Levi's women's business was a bright spot, Reuters reported, helped by demand for baggy jeans and by the brand's expansion into tops, skirts and dresses.
