Photo by Jeenah Moon/Bloomberg News
Levi Strauss now expects net revenue growth in the 7–7.5% range, up from its previous forecast of 5.5–6.5%, according to Reuters. The company also raised its adjusted earnings per share forecast to $1.46–1.52 from the previous range of $1.42–1.48. Analysts’ average estimate is about $1.50 per share.
Levi Strauss CEO Michelle Gass stated that the company sees significant potential in the higher-end denim segment. According to her, the new Blue Tab line is in the early stages of development but is already showing positive momentum.
“As the market leader in denim apparel, we must claim our fair share of the premium jeans segment,” Gass noted.
Premiumization as a Growth Strategy
The company attributes the sales growth to shifting consumer preferences. Shoppers are increasingly opting for loose silhouettes and expanding their purchases beyond classic jeans to include shirts, sweaters, and other casual wear items. Levi Strauss recorded its most significant growth in the women’s segment.
At the same time, the market remains challenging. About half of Levi Strauss’s sales come through the company’s direct channels, where a significant share of customers are middle- and lower-income consumers. This consumer segment is cutting back on discretionary spending due to rising food and fuel prices.
Levi Strauss is attempting to offset the slowdown in mass-market demand by increasing the average transaction value, developing higher-priced collections, and expanding its product range.
Sales in North and South America rose 9% over the quarter, while sales in Asia rose 10%. The European market showed weaker growth, with sales up 4%.
Tariffs and the restructuring of the global supply chain
Trade tariffs remain an additional source of pressure. The company continues to restructure its supply chain, reducing its dependence on China, Bangladesh, and Cambodia. In its annual forecast, Levi Strauss anticipates that tariffs will remain at 30% for China and 20% for other regions.
One element of the marketing strategy was a campaign tied to the FIFA World Cup. The buzz surrounding the temporary redesign of Levi’s Stadium garnered widespread attention on social media and became part of the brand’s efforts to strengthen its position among young consumers.
Levi Strauss, founded in 1853, went public in 2019 after more than three decades as a privately held company. The manufacturer is now focusing on premiumization, developing new apparel categories, and optimizing its supply chain to maintain growth amid a cautious consumer market.
