Levi Strauss (LEVI) Q3 2025 earnings

Levi StraussIn reporting third-quarter financial results on Thursday, the company said its profits rose more than Wall Street expected despite higher costs from tariffs, thanks to targeted price increases and a shift away from wholesalers.

According to StreetAccount, Levi’s gross margin rose 1.1 percentage points to 61.7%, compared with 60.6% in the same period a year earlier, and was better than analysts’ expectations of 60.7%.

In an interview with CNBC, CEO Michelle Gass said the company has started raising prices on some of its jeans and clothing and will raise more prices in the U.S. and other markets next year.

“We haven’t seen an impact on demand as we take these targeted actions. We’ll stay very, very close to that, of course, but… we’re taking a surgical, thoughtful approach to any pricing,” Gass said. “We know we’re a brand known for high quality and value. We don’t take that lightly. We know we have to earn it every day.”

Finance chief Harmit Singh added that demand was “really strong” and that most of the company’s revenue growth did not come from price increases.

Price increases help Levi’s margins, but the company also discounts less and sells more through its own website and stores rather than through wholesalers, which results in a higher margin.

The denim maker said its strong results led it to upgrade its full-year outlook, but added: Singh said he was still taking a “cautious” and “conservative” view of the rest of the year due to ongoing macroeconomic fluctuations.

Here’s how Levi’s performed this quarter compared to Wall Street’s expectations, according to a survey of analysts by LSEG:

• Earnings per share: 34 cents adjusted for 31 cents expected
• Revenue: $1.54 billion, expected $1.50 billion

Even though Levi’s posted better-than-expected results, shares fell more than 6% in extended trading. Shares are up nearly 42% this year through Thursday’s close.

The company’s reported net income for the three months ended Aug. 31 was $218 million, or 55 cents per share, compared to $20.7 million, or 5 cents per share, a year earlier. Excluding one-time items related to impairment and restructuring charges, among other expenses, Levi reported adjusted earnings of 34 cents per share.

Sales rose 7% to $1.54 billion from $1.44 billion a year earlier.

Levi’s expects full-year sales to rise 3% from a previous expectation of 1% to 2% growth, well above expectations for a 2.9% decline, according to LSEG.

It expects full-year adjusted earnings per share to be between $1.27 and $1.32, above the previous range of $1.25 to $1.30. At the top end, the outlook is in line with Wall Street estimates of $1.31 per share, according to LSEG.

The Jean company said it expects operating margin to be between 11.4% and 11.6%, which is in line with expectations of 11.6%, according to StreetAccount. The company currently expects gross margin to increase by 1 percentage point; That’s the outlook Levi’s offered earlier this year before factoring tariffs into its forecast. At the time, its guidance did not reflect any tariff impacts. In the next quarter, it lowered its gross margin forecast by 0.2 percentage points due to new taxes.

Now, Levi’s is returning to this original look as long as U.S. tariffs on imports from China remain at 30% for the rest of the year and tariffs on the rest of the world remain at 20%.

Under Gass’ management, Levi’s has been working to grow its direct sales, expand beyond jeans and attract more female customers; these strategies helped the business grow both its bottom line and bottom line.

During the quarter, direct-to-consumer revenue, or sales from Levi’s website and stores, rose 11%, thanks to strength in the U.S. market, while women’s income rose 9%. Levi’s is benefiting from strong momentum in the denim category, but the company is expanding its product offering beyond just jeans, giving it hedging if fashion trends change.

Beyond denim bottoms, other types of clothing, including tops, now make up almost 40% of the business. The company’s efforts to sell more tops have also resonated with consumers; because this category increased by 9% in the quarter.