Levi Strauss' Q2 Earnings Beat Estimates on Solid DTC Business

Levi Strauss & Co. LEVI reported second-quarter fiscal 2025 results, wherein earnings per share (EPS) and revenues beat the Zacks Consensus Estimate. Both metrics improved year over year. The company enters the second half of 2025 with strength to transform into a denim lifestyle brand and top-class DTC retailer.

Find latest EPS estimates and surprises on Zacks Earnings Calendar.

Direct-to-Consumer (DTC) has been a key growth driver, backed by positive comp growth, new openings and robust e-commerce performance. LEVI posted positive global comps for the 13th straight time in the reported quarter. Its innovation pipeline is also robust.

Levi Strauss, one of the world's largest brand-name apparel companies and a global leader in jeans wear posted quarterly adjusted EPS of 22 cents, which beat the Zacks Consensus Estimate of 14 cents and surged 37.5% from 16 cents reported in the prior-year period. 

Net revenues of $1.45 billion also beat the Zacks Consensus Estimate of $1.37 billion. Also, the metric jumped 6% year over year on a reported basis and 9% on an organic basis.

Levi Strauss & Co. Price, Consensus and EPS Surprise

Levi Strauss & Co. price-consensus-eps-surprise-chart | Levi Strauss & Co. Quote

Driven by solid second-quarter fiscal 2025 results, LEVI’s shares jumped more than 5% in after-hours trading yesterday. Shares of this Zacks Rank #3 (Hold) company have risen 31.9% in the past three months compared with the industry’s growth of 25.9%.

LEVI’s Quarterly Performance: Key Metrics & Insights

DTC net revenues reflected an increase of 11% on a reported basis and 10% on an organic basis to $716.1 million. Organic DTC growth was backed by a rise of 9% in the United States, 9% in Europe and 10% in Asia. E-commerce net revenues were up 13% on a reported basis and an organic basis. In the fiscal second quarter, DTC accounted for 50% of the overall net revenues.

Wholesale net revenues rose 3% on a reported basis to $729.9 million. The metric rose 7% on an organic basis. Beyond Yoga revenues grew 12% on both a reported and organic basis.

The Zacks Consensus Estimate for DTC and Wholesale channels was pegged at $692 million and $679 million, respectively, for the fiscal second quarter.

In the Americas, revenues increased 5% on a reported basis and 9% on an organic basis, backed 
by double-digit growth in both DTC and wholesale channels. The company’s full-price stores continue to perform outstandingly well, with comp sales rising high single digits. LatAm was up 18%, with broad-based trends across the region and double-digit growth in Mexico. In Europe, revenues jumped 14% on a reported basis and 15% on an organic basis.

In Asia, revenues were flat both on a reported basis and an organic basis, owing to the company’s proactive efforts to improve the structural economics, consisting of reducing sales to less profitable partners in India, taking back a portion of its franchisee business in Malaysia and rationalizing its franchisee base in China. DTC was up double digits and markets, including Japan, Turkey and South Africa, registered sturdy growth. Management projects year-to-date trends to continue, and Asia is on track to deliver mid-single-digit growth for the year.

LEVI’s Margins & Expenses

Gross profit increased 8.8% year over year to $905.8 million. The gross margin expanded 140 basis points (bps) to 62.6% in the fiscal second quarter. This growth was primarily buoyed by lower product costs and a favorable channel mix.

Adjusted EBIT margin jumped 190 bps to 8.3%, driven by gross margin expansion.

Adjusted SG&A edged up 5.4% to $744 million; however, as a percentage of revenues, adjusted SG&A leveraged 50 bps to 54.4%.

Levi Strauss’ Other Financial Snapshots

LEVI ended the quarter with cash and cash equivalents of $653.6 million and total liquidity of $1.5 billion. As of June 1, 2025, long-term debt and total shareholders’ equity were $1 billion and $2.1 billion, respectively. Total inventories jumped 15% on a dollar basis. In the six months of fiscal 2025, net cash generated from operating activities was $238 million and adjusted free cash flow was $146 million.

In the fiscal second quarter, the company returned nearly $51 million to its shareholders through dividends, up 8% year over year. At the quarter end, LEVI had $560 million remaining in its existing share repurchase authorization, with no expiration date. As earlier announced, the company plans to utilize at least $100 million of net proceeds from the sale of Dockers to return to shareholders in the form of share repurchases.

For Q3, management has hiked the dividend to 14 cents a share, totaling nearly $55 million in cash, payable Aug. 8, 2025, to the holders of record of Class A common stock and Class B common stock as on July 24, 2025.

What to Expect From LEVI in FY25?

The 2025 outlook is based on continuing operations, with the Dockers business as discontinued operations. This assumes U.S. tariffs on imports from China at 30% and Rest-of-World at 10% for the rest of the year.

LEVI’s fiscal third-quarter reported net revenue growth is expected to be 1-2%, up from (1%) to (2%) anticipated earlier. For the fiscal third quarter, it projects organic net revenue growth of 4.5-5.5% compared with the previous forecast of 3.5-4.5%. 

The gross margin is likely to be up 80 bps and the adjusted EBIT margin is likely to be in the band of 11.4-11.6%, up 70-90 bps. Adjusted EPS is envisioned to be $1.25-$1.30, up from $1.20-$1.25.

Key Picks in Retail

We have highlighted three better-ranked stocks, namely Urban Outfitters URBN, Canada Goose GOOS and Haverty Furniture Companies HVT.

Urban Outfitters (URBN), a lifestyle specialty retailer that offers fashion apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales indicates growth of 8.5% from the year-ago figure. URBN delivered an average earnings surprise of 29% in the last four quarters.

Canada Goose, a global outerwear brand, currently carries a Zacks Rank #2 (Buy). GOOS delivered an average earnings surprise of 57.2% in the trailing four quarters.

The Zacks Consensus Estimate for Canada Goose’s current financial-year sales indicates growth of 2.9% from the year-ago figure. 

Haverty Furniture, a home-furnishings retailer in the Southern and Midwestern regions, currently has a Zacks Rank of 2. HVT delivered an average earnings surprise of 62.8% in the trailing four quarters.

The Zacks Consensus Estimate for HVT’s current financial-year sales indicates growth of 3.9% from the year-ago figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research