Levi Strauss increased its adjusted earnings per share forecast for the fiscal year to between $1.54 and $1.56, up from $1.46 to $1.52, although this still falls short of analysts' expectations of $1.52 to $1.59. The company reduced its net revenue growth guidance to 7%, the lower end of its previous forecast of 7% to 7.5%.
In the fiscal third quarter, Levi reported a 4% increase in net revenues in the Americas, but a 1% decline in U.S. revenue. The operating margin improved to 13.8%, aided by tariff refunds that contributed significantly to earnings. Despite a slight increase in overall sales to $1.61 billion, net income fell to $168.6 million from $218.1 million a year earlier.
Direct-to-consumer sales rose 2%, but comparable sales were flat, while wholesale revenues increased by 6%. CEO Michelle Gass expressed optimism about the DTC business's potential for mid-single-digit growth in the fourth quarter, despite recent underperformance.
This mixed outlook suggests that while Levi is benefiting from cost reductions, its revenue growth may face challenges, impacting investor sentiment