Levi Strauss revenue jumps again, with DTC making up more than half of sales for the first time
Why it matters: Levi Strauss's DTC strategy, now over half of sales, could boost full-year earnings by $35 million if tariffs remain at 10%.
- Levi Strauss saw revenue jump 14% to $1.74 billion, beating Wall Street expectations of $1.65 billion.
- DTC sales now account for 52% of overall revenue, a first for the company, with CEO Michelle Gass anticipating this trend to continue throughout the year.
- Higher prices and positive foreign exchange contributed to about half of Levi's growth, according to outgoing CFO Harmit Singh.
- Levi's full-year sales guidance was raised to between 5.5% and 6.5% growth, largely ahead of estimates, though adjusted earnings per share guidance of $1.42-$1.48 is shy of some expectations.
- Potential tariff reductions could boost full-year earnings by $35 million (7 cents per share) if a 10% tariff remains, and the company could receive an $80 million refund from previous tariffs, as noted by Harmit Singh.
- Consumer spending has not shown a pullback despite higher gas prices, with Levi's value brand Signature up 16% and middle market Red Cap up 9%, indicating broad demographic reach, per CEO Michelle Gass.
Levi Strauss achieved a significant milestone with direct-to-consumer (DTC) sales surpassing 50% of total revenue for the first time, driven by a 16% jump in its own stores and website, alongside higher prices. Despite this shift, CEO Michelle Gass expects continued growth in traditional wholesale channels, while CFO Harmit Singh noted that half of the company's growth stems from recent price increases and half from increased unit sales.
