Levi’s Q1 tops expectations; sees ‘minimal’ tariff impact in Q2
Levi Strauss & Co. reported a strong first quarter as its direct-to-consumer business continues to gain momentum at home and abroad.
During the company’s earnings call, CFO Harmit Singh said Levi’s is “scenario planning and determining different mitigation strategies” with regards to the new tariffs. With most products for the spring and early summer already in the U.S., he expects “minimal impact” to the company’s margins in the second quarter. Singh added that the tariffs could be a "significant challenge" later in the year, but noted that they are “fluid” and could change.
“While we recognize that we are operating in an uncertain environment, our global footprint, strong margin structure and agile supply chain position us to navigate the balance of the year and beyond,” CEO Michelle Gass said in the company’s earnings release.
On the earnings call, Gass said the that the company would be "surgical" with any pricing changes related to the new tariffs.
First Quarter
Net income totaled $135 million, or $0.34 a share, for the quarter ended March 2, compared to a loss of of $10.6 million, or $0.03 a share, in the year-ago period. Adjusted earnings per share came to $0.38. topping the $0.28 a share analysts had expected.
Sales totaled $1.53 billion and were up 3% on a reported basis and 9% on an organic basis. The Levi’s brand was up 8% globally on an organic basis.
The financials in Levi’s first-quarter earnings release excluded $67 million in sales related to Dockers, which the company now considers “discontinued operations.” (In October, Levi's said it had initiated a formal review of strategic alternatives for the Dockers brand, which could include a potential sale. According to a recent report by WWD, Marquee Brands is in exclusive talks with Levi's to buy Dockers.)
In the Americas, net revenues increased 6% on a reported basis and 11% on an organic basis. Within the Americas, the U.S. grew 8% on an organic basis.
Direct-to-consumer net revenues increased 9% on a reported basis and 12% on an organic basis. DTC growth on an organic basis reflected an 8% increase in the U.S., an 11% increase in Europe and a 14% increase in Asia.
Net revenues from e-commerce grew 13% on a reported basis and 16% on an organic basis. DTC comprised 52% of total net revenues in the first quarter.
“We exceeded revenue and profitability expectations in Q1 marking a strong start to the year, another proof point that our transformation strategy is working," stated Gass. "The Levi’s brand is stronger than ever, and we will continue to fuel this momentum through a robust product pipeline and by keeping the brand firmly at the center of culture across the globe.”
The company maintained guidance for fiscal 2025 based on continuing operations, excluding the impact of the recent tariffs. It anticipates a slight decline in reported net revenue, ranging between 1% and 2%.
Levi’s ended the quarter with $574 million in cash and total liquidity of $1.4 billion.
The company’s products are sold in approximately 120 countries worldwide through a combination of chain retailers, department stores, online sites, and a global footprint of approximately 3,200 retail stores and shop-in-shops.
