Levi Strauss lifts full-year earnings outlook following tariff refunds and strategic expansion

# Levi Strauss Raises Annual Profit Forecast After $79 Million Tariff Refund

Levi Strauss & Co. has raised its full-year profit forecast after receiving a substantial tariff refund and recording strong international sales, despite weaker U.S. retail performance and unusually warm autumn weather in Europe. The denim maker is counting on targeted marketing investments and seasonal demand to sustain momentum through the end of the year.

The San Francisco-based apparel company now expects adjusted earnings of $1.54 to $1.56 per share for the full year, up from its previous forecast of $1.46 to $1.52. The revised outlook follows a $79 million refund during the quarter ended August 30 for tariffs previously paid under the International Emergency Economic Powers Act.

Company executives said approximately $60 million of the recovered funds would be reinvested this year in promotional initiatives and brand marketing. The strategy is intended to strengthen consumer engagement and support sales as the company enters the important holiday shopping season.

Levi Strauss reported third-quarter net revenue of $1.61 billion, an increase of 4% from the previous year. The result was broadly in line with analysts’ expectations of $1.62 billion, according to estimates compiled by LSEG. Adjusted earnings reached 48 cents per share, comfortably exceeding market expectations of around 36 cents.

The company also refined its full-year organic revenue growth forecast to 6%, the upper end of its earlier range of 5.5% to 6%. The updated outlook reflects confidence in its international business and product portfolio, although challenges in its domestic retail operations remain.

## U.S. Retail Sales Face Consumer Spending Challenges

Despite stronger earnings, Levi Strauss encountered difficulties in its direct-to-consumer business in the United States, where comparable sales remained flat during the quarter. Chief Executive Officer Michelle Gass said performance in the channel fell short of internal expectations amid softer domestic sales.

Higher fuel prices have also added pressure to consumer spending, according to retail consultant Bruce Winder. With household budgets facing competing demands, apparel retailers must work harder to attract shoppers and encourage discretionary purchases.

Levi Strauss also acknowledged shortcomings in its U.S. back-to-school marketing campaign. The company placed too much emphasis on loose-fitting pants rather than focusing on popular low-rise styles that better matched consumer preferences. The experience highlights the importance of aligning product promotions with rapidly changing fashion trends.

In Europe, unusually warm autumn weather reduced store traffic, creating another obstacle for the retailer. The conditions affected seasonal shopping patterns as consumers had less immediate reason to purchase colder-weather clothing.

## Women's Apparel and Premium Denim Support Growth

Several product categories helped offset the weaker retail environment. Women's apparel was a particularly important contributor, with tops, skirts and dresses, alongside other products beyond traditional denim bottoms, accounting for approximately half of the company's quarterly revenue growth.

The Blue Tab premium denim collection also delivered double-digit growth, reflecting the brand's ability to attract higher-income consumers. The performance demonstrates Levi Strauss' efforts to expand beyond its traditional denim offerings and appeal to shoppers seeking premium products.

International markets provided another source of strength. Sales in China rose 13%, supporting the company's broader expansion efforts in Asia. A high-profile collaboration with recording artist Rosé also helped bring additional attention to the brand.

The combination of premium products, women's apparel and international growth has helped Levi Strauss maintain its financial momentum despite uneven demand across regions. The company continues to rely on a diversified product mix and global distribution network to navigate changing consumer behavior.

## Holiday Season Becomes a Key Focus

With inventory levels optimized and holiday merchandise arriving, Levi Strauss is preparing for the year-end shopping period. Management plans to use part of the tariff refund to strengthen promotional campaigns and increase brand visibility as retailers compete for consumer spending.

The additional funds provide the company with greater flexibility to invest in marketing while maintaining its revised earnings outlook. However, the effectiveness of those investments will depend on consumer demand, the performance of seasonal products and retail conditions in key markets.

Levi Strauss' latest results present a mixed picture: stronger-than-expected adjusted earnings and international growth have supported its improved forecast, while flat comparable sales in its U.S. direct-to-consumer business and weather-related challenges in Europe remain concerns.

As the holiday season approaches, the company will seek to convert its financial gains and marketing investments into sustained sales growth across its retail and wholesale operations.