Levi Strauss (LEVI) Q3 2025 earnings

Levi Strauss Defies Expectations with Strong Q3 Results

Levi Strauss, the iconic denim manufacturer, has reported a remarkable fiscal third quarter, surpassing Wall Street’s expectations despite facing higher costs due to tariffs. The company’s profits have been boosted by targeted price increases and a strategic shift away from wholesalers. According to Levi Strauss, this approach has been successful, with the company’s gross margin growing 1.1 percentage points to 61.7% during the quarter.

The denim maker’s CEO, Michelle Gass, attributed the success to a “surgical, thoughtful approach” to pricing, which has not impacted demand. In an interview with CNBC, Gass revealed that the company has started to raise prices on some of its jeans and clothing items and plans to implement further price hikes in the US and other markets next year. Finance chief Harmit Singh added that demand is “really strong” and that most of the company’s revenue growth is not coming from price increases.

Key Drivers of Growth

Levi Strauss’s strong results can be attributed to several key factors, including a reduction in discounting and an increase in sales through its own website and stores, which come with higher margins. The company’s direct-to-consumer revenue grew 11% during the quarter, driven by strength in the US market, while women’s sales were up 9%. Additionally, Levi Strauss has been expanding its product assortment beyond denim, with other types of clothing now making up nearly 40% of the business.

The company’s efforts to sell more tops are also paying off, with that category up 9% during the quarter. This diversification strategy has helped Levi Strauss to reduce its dependence on denim and provides a hedge against changes in fashion trends. As a result, the company has raised its full-year outlook, expecting sales to rise 3% and adjusted earnings per share to be between $1.27 and $1.32.

Navigating Macroeconomic Volatility

Despite the strong results, Levi Strauss is taking a “prudent” and “conservative” approach to the rest of the year, citing ongoing macroeconomic volatility. The company’s stock had climbed about 42% this year through Thursday’s close but dropped more than 6% in extended trading after the earnings report. However, with its diversified product range, strong direct-to-consumer sales, and targeted pricing strategy, Levi Strauss is well-positioned to navigate the challenges ahead and continue to deliver growth and profitability.

Levi Strauss’s commitment to growing its direct sales, expanding beyond jeans, and winning over more female shoppers has been successful, with the company reporting strong top and bottom-line growth. As the denim market continues to evolve, Levi Strauss is poised to remain a leader, with its focus on quality, value, and customer experience driving long-term success.