Levi Strauss & Co. reported second-quarter results on Wednesday that topped analyst expectations on revenue and earnings, and the company raised its full-year outlook — yet its stock fell more than 5% in after-hours trading.
For the quarter that closed May 31, the company delivered adjusted earnings of 28 cents per share, clearing the 24-cent consensus estimate, CNBC reported. Sales reached $1.56 billion, an 8% year-over-year increase that came in ahead of the $1.52 billion analysts had projected. Profit from continuing operations totaled $95 million, compared with $80 million in the year-ago period.
On a regional basis, the Americas posted $815 million in sales, a 9% gain that included 5% growth domestically. Europe reached $420 million, up 4%, though organic sales in that region slipped 1% because a distribution center shift in the prior-year period had pulled forward some shipments. Asia contributed $284 million, a 10% advance. The Beyond Yoga label added $43 million, finishing 16% higher than the same quarter last year.
The company's direct-to-consumer channel, now representing 51% of total net revenue, expanded 11%, with e-commerce up 19%. The wholesale business grew 5%.
Looking ahead to the full fiscal year through November 29, management updated its top-line growth target to between 7% and 7.5%, lifting the previous 5.5%-to-6.5% range. On the bottom line, the updated annual forecast calls for adjusted earnings of $1.46 to $1.52 per share, widening the top end of the prior $1.42-to-$1.48 outlook. At $1.51 per share, the analyst consensus sat above the midpoint of the new earnings range, and The Wall Street Journal reported that some investors had anticipated a more substantial increase.
Shareholders will also receive a quarterly dividend of 16 cents per share — 14% more than a year ago — with payment scheduled for August 5 to those on record as of July 22.
"The Levi's brand is connecting with consumers around the world in more powerful ways than ever before, and our Q2 results are another proof point that our strategies are working and our team is executing," president and chief executive officer Michelle Gass said in a statement.
In a statement, CFO Harmit Singh pointed to widening gross margins and tight control over costs as the factors underpinning stronger profitability, and said the full outperformance from the second quarter has been folded into the revised annual targets.
Speaking with CNBC, Gass described the brand's core shoppers as holding up well, and said that volume gains — rather than price increases — accounted for roughly two-thirds of the quarter's revenue growth. The company's guidance assumes U.S. tariffs on imports from China remain at 30% and rest-of-world tariffs remain at 20%, with no significant worsening of macroeconomic conditions.