Levi Strauss (LEVI) Stock: Beat Earnings, Raised Guidance — So Why Is It Down?

TLDR

• Levi Strauss posted Q2 adjusted EPS of $0.28, beating the $0.24 consensus estimate
• Revenue hit $1.56 billion, up 8% year-over-year, topping the $1.52 billion forecast
• Full-year EPS guidance raised to $1.46–$1.52; revenue growth outlook lifted to 7%–7.5%
• Quarterly dividend raised 14% to $0.16 per share, the fourth consecutive annual increase
• LEVI stock fell more than 5% in after-hours trading despite the beat and raised outlook

Levi Strauss beat Wall Street’s Q2 estimates on both earnings and revenue Wednesday, raised its full-year guidance, and hiked its dividend — then watched its stock drop more than 5% in after-hours trading.

Levi Strauss & Co., LEVI

The company posted adjusted EPS of $0.28 for the quarter ended May 31, clearing the $0.24 consensus. Revenue came in at $1.56 billion, an 8% jump from a year ago, ahead of the $1.52 billion analysts had expected. Profit from continuing operations was $95 million, up from $80 million a year earlier.

The after-hours drop is a classic case of “buy the rumor, sell the news.” Some investors had been hoping for a bigger guidance bump, and the new EPS range of $1.46–$1.52 landed below the analyst consensus of $1.51 at the midpoint.

During the day on July 9, LEVI stock was up about 1%. The stock has gained 24% over the past 12 months.

Regional and Channel Breakdown

Every region contributed. The Americas brought in $815 million, up 9%, with domestic growth of 5%. Europe added $420 million, up 4%, though organic sales dipped 1% due to a prior-year distribution center shift. Asia posted $284 million, up 10%. The Beyond Yoga label added $43 million, up 16%.

The direct-to-consumer channel, now 51% of total net revenue, grew 11%. E-commerce alone rose 19%. Wholesale was up 5%.

CEO Michelle Gass said on CNBC that volume gains, not price hikes, drove roughly two-thirds of revenue growth. She described the company’s core shoppers as holding up well.

CFO Harmit Singh pointed to wider gross margins and cost discipline as the key drivers behind stronger profitability.

Guidance and Dividend

For the full fiscal year ending November 29, Levi raised its revenue growth target to 7%–7.5%, up from the prior 5.5%–6.5% range. Adjusted EPS guidance was lifted to $1.46–$1.52, from $1.42–$1.48.

The company’s guidance assumes U.S. tariffs on Chinese imports hold at 30% and rest-of-world tariffs stay at 20%.

The quarterly dividend was raised to $0.16 per share, a 14% increase from the previous $0.14. That gives LEVI a yield of roughly 2.50%. Payment is set for August 5 to holders of record as of July 22.

This marks four straight years of dividend increases after the company paused hikes during the COVID-19 pandemic.

Eleven Wall Street analysts currently rate LEVI a Strong Buy, with nine Buy and two Hold recommendations. The average price target of $28.09 implies about 14% upside from current levels.

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