Levi's Raises Full-Year Forecast on Premium Denim Push and DTC Growth

Quick Facts

Q2 net revenue rose 8% to $1.56 billion, beating analyst estimates of $1.52 billion
Direct-to-consumer revenue grew 11% and now accounts for 52% of total net revenues; e-commerce rose 19%
Full-year revenue growth guidance raised to 7.0%-7.5% from 5.5%-6.5%

Levi Strauss raised its annual sales forecast on July 8 after posting second-quarter results that topped Wall Street expectations, driven by premium denim sales and a direct-to-consumer business that now makes up more than half of total revenue.

For the quarter ended May 31, net revenue reached $1.56 billion, up 8% year over year and ahead of the $1.52 billion analysts projected. Adjusted earnings came in at 28 cents per share, above the 24-cent consensus estimate. The company lifted adjusted EPS guidance to $1.46-$1.52 from $1.42-$1.48.

Despite the beat, shares fell roughly 5% in extended trading. The midpoint of the updated profit guidance range came in slightly below analyst expectations, triggering the selloff even as shares remained up 17.5% year-to-date.

Premium Denim Moves Upmarket

CEO Michelle Gass pointed to the company’s Blue Tab line as a key growth driver. Launched for Spring 2025, Blue Tab retails from $78 to $398 in the U.S. and up to $800 for jackets in Europe. The line uses proprietary selvedge denim made with Japan’s Kaihara Denim Mill.

‘As the denim leader, we should have our fair share of the premium denim market,’ Gass said on a post-earnings call. She described the Blue Tab line as still in early stages but gaining traction across Asia, Europe, and the U.S.

CFO Harmit Singh noted that premium denim represents roughly 10% of the $100 billion global denim market but is growing faster than the mid-single-digit rate seen in the broader jeans category. Levi’s plans to expand the $300 denim line into more stores in 2026, targeting higher-income shoppers.

Regional and Category Performance

Americas sales rose 9% in the quarter. Asia posted a 10% gain. Europe grew just 4%, a sharp deceleration from both the prior quarter and a year earlier. Beyond Yoga, Levi’s activewear brand, increased 16%.

Gass said women’s clothing performed especially well, with shoppers gravitating toward loose silhouettes and newer categories including button-down shirts and sweaters. Levi’s has been expanding beyond denim into dresses, skirts, and tops as part of its broader push to become a head-to-toe lifestyle brand.

DTC and Operational Execution

Direct-to-consumer revenue grew 11% on a reported basis and 8% organically, while e-commerce revenue rose 19% reported and 17% organically. The company has posted revenue increases each quarter for the past two years, supported by its investment in higher-margin owned channels.

Operating margin reached 7.8%, up 35 basis points from a year earlier. Adjusted EBIT margin was 9.0%, up 70 basis points. The company is also pulling back on promotional discounting, including eliminating events like 20%-off sales, to protect margins and strengthen brand perception.

Levi’s is working to increase the commonality of product across its global store network from less than 10% to roughly 40%. The move is designed to reduce complexity across 120 countries and generate efficiencies in design, sourcing, and merchandising.

Tariff Exposure and Supply Chain

The company’s full-year forecast assumes tariffs remain at 30% for China and 20% for the rest of the world. Levi’s disclosed combined foreign exchange and tariff gross margin compression of approximately 170 basis points.

The company said roughly 1% of its sourcing comes from China, about 5% from Mexico, and mid- to high-single digits from Vietnam. Levi’s has been actively diversifying away from higher-tariff countries including Bangladesh and Cambodia.

A FIFA World Cup marketing campaign also drew attention this quarter. Levi’s turned FIFA’s temporary removal of branding from Levi’s Stadium during World Cup preparations into a global campaign that generated millions of social media views. Gass called it a ‘big moment for the brand.’