Levi Strauss Q1: DTC Growth and Guidance Lift Outlook
What happens when a heritage jeans maker leans into its own stores and website? Levi Strauss answered that question this quarter as direct connections with shoppers powered sharper results and a raised outlook.
Levi Strauss reported revenue growth of 14% in the first fiscal quarter, with direct-to-consumer sales jumping 16% and accounting for 52% of total revenue. CEO Michelle Gass said she expects DTC revenue to remain above half of total sales for the rest of the year, even while the wholesale channel continues to expand. The company is seeing both price gains and favorable foreign exchange trends, and finance chief Harmit Singh, who announced plans to retire on Tuesday, said roughly half of the growth came from recent price increases and half from units sold.
Investors should watch margin trends and tariff developments closely, because those factors could swing results more than seasonal demand. Levi Strauss’s ability to convert DTC scale into higher profitability will be decisive for future earnings.
Levi beat analyst forecasts in the quarter. Adjusted earnings per share were 42 cents versus 37 cents expected. Revenue came in at $1.74 billion, ahead of the $1.65 billion analysts had anticipated. The company’s reported net income for the three-month period that ended March 1 was $175.8 million, or 45 cents per share, compared with $135 million, or 34 cents per share, a year earlier. Sales rose to $1.74 billion, up about 14% from $1.53 billion a year earlier.
Following the stronger-than-expected start, Levi raised its full-year guidance. It’s now expecting full-year adjusted earnings per share to be between $1.42 and $1.48, shy of expectations of $1.47 per share on the low end, based on a survey of analysts. The company expects sales to increase between 5.5% and 6.5%, largely ahead of estimates of 5.6%, based on a survey of analysts. Singh said the company believes DTC margins will improve as the channel scales, even though the DTC-first approach requires short-term investment in distribution and other costs.
Tariff scenarios also loom large for the outlook. The company is currently modeling a 20% global tariff, though President Donald Trump has for now set a 10% duty on U.S. imports after the Supreme Court rolled back so-called reciprocal tariffs earlier this year. If that 10% duty remains in effect, Levi could see a full-year earnings boost of $35 million, or 7 cents per share. Singh added the company could potentially receive as much as $80 million after the Supreme Court struck down Trump’s previous global tariff policy. Management warned that consumer choices could shift if higher gas prices persist, but Gass said she has not seen a pullback in spending so far and highlighted Levi’s wide reach across demographics.
“We talked about over the last couple years, we made big, bold moves like selling Dockers and other brands and businesses. Now we’re really focused on segmentation around the Levi’s umbrella,” said Gass. “We feel like we’re really covered to serve the consumer across really every demographic and psychographic cohort and I think the other piece is, when we think about our business globally, 60% of our business is outside the U.S., which also gives us some really nice diversification. So we’re watching it closely, but overall, we’re feeling good about the consumer.”
The quarter also showed strength across tiers of the business. Levi’s value brand Signature saw sales rise 16% during the quarter, and its middle market Red Cap was up 9%, while its premium Blue Tab line also grew. This balance between value and premium offerings, plus geographic diversification, supports Levi’s broader strategy even as it pivots toward more direct customer relationships that can lift long-term margins for Levi’s Inc and the Levi’s brand.
As the year progresses, monitoring DTC profitability, tariff outcomes, and consumer spending will be crucial to assessing how far the company can extend this early momentum. For now, Levi Strauss enters the remainder of the year with stronger sales, rising profits, and a clearer path to higher-margin revenue.