Levi Strauss lifts annual sales, profit forecasts on resilient denim demand

(Reuters) -Levi Strauss raised its full-year sales and profit forecasts on Thursday, banking on strong demand for wide-leg denim bottoms in Europe and the Americas despite higher tariffs. The denim-maker now expects fiscal-year 2025 organic net revenue from continuing operations, excluding Dockers, to rise about 6%, compared to its prior target of a 4.5% to 5.5% increase. Retailers including Levi, American Eagle Outfitters and Abercrombie & Fitch have benefited from a resurgence in Y2K-inspired styles and casual wear, with Gen Z and younger millennials driving sales of baggy, loose-fit apparel. 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%. 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.  It projects 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 forecast assumes U.S. tariffs will remain at 30% for China and 20% for other countries through the year-end. Shares of the company fell 7% in extended trading. The stock has gained nearly 42% so far this year. 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 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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