Levi Strauss & Co. (LEVI) reported a strong first-quarter profit that exceeded expectations, driven by increased full-price sales of its jeans and cost-saving measures that improved margins. The stock rose by 4% in aftermarket trading following the announcement. Levi’s robust direct-to-consumer channel, strategic celebrity partnerships, and effective marketing are bolstering shopper interest, helping the brand navigate uncertain economic conditions. One particularly notable characteristic that is grabbing investors’ attention, given the current market environment, is the fact that the company’s diverse supply chain spans over 25 countries, providing an advantage amid tariff risks that are impacting the industry. Looking ahead, Levi Strauss is planning for modest revenue fluctuations while maintaining a strong margin structure and remaining prepared to address future challenges.
Earnings Beat
Levi’s is a well-established apparel company recognized globally for its classic American style. The company’s product line is extensive, catering to men, women, and children with offerings that include casual and dress pants, shorts, shirts, skirts, dresses, jackets, footwear, and related accessories.
For the first quarter of 2025, Levi’s reported strong financial performance, surpassing analyst expectations with an EPS of $0.38 compared to an anticipated $0.28. This marks the sixth consecutive quarter the company has exceeded profit projections. The company’s consolidated net revenue saw a 3% increase on a reported basis and a 9% rise on an organic basis, with notable growth in the Levi’s brand globally and specific markets such as the Americas, where revenue was up 6% on a reported basis and 11% on a constant-currency basis. However, the European market experienced a 5% decrease. Asia demonstrated positive momentum with a 7% increase. The company also improved its gross margin to 62.1% of sales from 58.8% the previous year.
The company ended the quarter with $574 million in cash and a total liquidity of $1.4 billion, despite a 7% increase in total inventory from the prior year. The company has secured inventory for U.S. orders for the next quarter and has $560 million left for share repurchases. Looking forward, Levi’s projects a full-year revenue change of -1 % to -2 % and adjusted EPS in the range of $1.20 to $1.25. Despite facing an uncertain economic environment, Levi Strauss maintains confidence in its global operations, robust margin structure, and flexible supply chain.
Initial Analyst Response Cautious in Tone
Citi’s Paul Lejuez has reduced the price target for Levi Strauss from $19 to $14 while maintaining a Neutral rating, noting that the new tariff plan, as outlined, will adversely affect apparel companies, primarily due to the significant increase in product costs with most sourcing occurring in Asia. Lejuez expressed skepticism about the company’s ability to offset the increased costs through pricing power, suggesting that any attempts to raise prices might weaken consumer demand.
Levi Strauss & Co is rated a Moderate Buy overall, based on the recent recommendations of 12 analysts. The average price target for LEVI stock is $20.58, which represents a potential upside of 52.44% from current levels.
