Will Solid DTC Business Demonstrate Levi's Next Leg of Growth?

Levi Strauss & Co. LEVI continues to build momentum across its Direct-to-Consumer (DTC) strategy, anchoring future growth on higher margins, stronger customer engagement and improved financial resilience. As LEVI shifts toward a DTC-first model, DTC has become a central growth engine.

In second-quarter fiscal 2025, DTC continued to perform well on the back of positive comparable sales, store traffic, store openings, improved conversion rates and robust e-commerce performance. LEVI posted positive global comps for the 13th straight time in the reported quarter. Its innovation pipeline also remains robust. This has been driving the company’s top line for a while. Net revenues jumped 6% year over year on a reported basis and 9% on an organic basis in the reported quarter.

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 improved 13% on a reported basis and organic basis. In the fiscal second quarter, DTC accounted for 50% of the overall net revenues.

Levi has made significant strides in accelerating its shift toward becoming a DTC-first business across brick-and-mortar and e-commerce. Hence, Levi’s sturdy DTC business signals its next phase of growth and reinforces its strategic evolution.

LEVI’s Price Performance, Valuation and Estimates

Levi’s shares have gained 21.2% year to date against the industry’s 12% decline.

From a valuation standpoint, LEVI trades at a forward price-to-earnings ratio of 15.23X compared with the industry’s average of 17.92X.

The Zacks Consensus Estimate for LEVI’s fiscal 2025 and fiscal 2026 earnings per share (EPS) indicates year-over-year growth of 4% and 10.9%, respectively. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has moved northward in the past 30 days. 

Levi currently sports a Zacks Rank #1 (Strong Buy).

More Key Picks in Retail

We have highlighted three other top-ranked stocks, namely Urban Outfitters URBN, Canada Goose GOOS and Dollar Tree DLTR.

Urban Outfitters, a lifestyle specialty retailer that offers fashion apparel and accessories, currently sports a Zacks Rank of 1. 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 sports a Zacks Rank of 1. 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. 

Dollar Tree, an operator of discount variety stores offering merchandise and other assortments, currently has a Zacks Rank #2 (Buy) at present. DLTR delivered an average negative earnings surprise of 6.9% in the trailing four quarters.

The Zacks Consensus Estimate for DLTR’s current financial-year EPS indicates growth of 6.5% from the year-ago figure.

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

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