The stock of Levi Strauss (LEVI) is up 5% after the clothing retailer known for its blue jeans reported financial results that beat Wall Street forecasts and raised its guidance.
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San Francisco-based Levi Strauss reported earnings per share (EPS) of $0.22, which topped the consensus forecast among analysts that called for $0.13. Revenue in the year’s second quarter totaled $1.45 billion, which was ahead of the $1.37 billion expected on Wall Street. Sales were up 6% from a year earlier.
Looking ahead, Levi Strauss raised its full-year guidance, saying it’s working to absorb some of the costs from higher tariffs. The denim maker said it now expects full-year earnings of $1.25 to $1.30 per share, up from a previous forecast of $1.20 and $1.25, and better than the $1.23 that analysts anticipated.
The company expects sales to rise between 1% and 2% this year, up from previous guidance of down 1% to 2%. That range is also ahead of Wall Street expectations, which expected revenue to decline 5.2%.
Levi Strauss’ earnings per share. Source: Main Street Data
Assumptions
Levi Strauss’ current forecast assumes a 30% tariff on China, where the company manufactures about 1% of its clothing items, and a 10% tariff on the rest of the world. Those assumptions could change as U.S. President Donald Trump negotiates trade deals with key manufacturing regions, notably in Asia.
Management at the company has said that 60% of the products they sell are manufactured outside the U.S. However, for the time being, Levi Strauss said that it plans to absorb the tariff impacts without raising prices on consumers. To that end, the company forecasts that tariffs will impact its business by $25 million to $30 million for the rest of this year, or about two to three cents per share.
LEVI stock has risen 16% this year.
Is LEVI Stock a Buy?
The stock of Levi Strauss has a consensus Strong Buy rating among nine Wall Street analysts. That rating is based on eight Buy and one Hold recommendations issued in the last three months. The average LEVI price target of $20.06 implies 1.67% upside from current levels. These ratings are likely to change after the company’s latest financial results.
