Levi Strauss forecasts annual profit below estimates as tariffs weigh

By Savyata Mishra (Reuters) -Levi Strauss raised its full-year profit forecast on Thursday, but the projection fell short of Wall Street expectations, sending shares of the denim-maker down about 6% in extended trading. The company now expects fiscal-year 2025 adjusted profit per share in the range of $1.27 to $1.32, up from its prior forecast of between $1.25 and $1.30 per share. The mid-point was below an estimate of $1.31, according to data compiled by LSEG. The forecast assumes U.S. tariffs will remain at 30% for China and 20% for other countries through the year-end. Tariffs impacted the company's gross margins by 80 basis points in the reported quarter, CFO Harmit Singh told Reuters, adding that the impact would be 130 basis points in the fourth quarter, which includes the crucial holiday season. The company, which sources the bulk of its products from South Asia – including Bangladesh and Pakistan – has undertaken modest price hikes and secured inventory ahead of the key holiday season to limit disruptions from volatile trade policies.  Levi has leaned into full-price sales through its direct-to-consumer channel, broadened its product offerings and kept a tight leash on stock-keeping units, or SKUs, an industry term for inventory.  Robust international demand helped cushion some tariff pain, with quarterly revenues in Asia and Europe growing 12% and 5%, respectively. Globally, DTC sales witnessed 9% growth, while online sales jumped 16%. San Francisco, California-based Levi Strauss reported a 7% rise in net revenue for the quarter ended August 31 to $1.54 billion, beating analysts' estimate of $1.50 billion, according to data compiled by LSEG. Adjusted profit came in at 34 cents per share, from 33 cents per share in the same period last year. Operating margin improved to 10.8% from 2.3% a year earlier, driven by higher DTC as well as full-price sales. (Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)

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