LEVI Strauss on Wednesday raised its annual net sales forecast, betting that its premium denim products would appeal to higher-income shoppers even as economic uncertainty weighs on broader consumer spending.
But the apparel maker’s shares fell about 5 percent in extended trading. While the company raised its full-year profit outlook, the midpoint of that range fell slightly short of expectations.
Levi’s has expanded beyond denim into dresses, skirts and tops, while investing heavily in its higher-margin direct-to-consumer business, helping it post revenue increases each quarter for the past two years. For the second quarter that ended on May 31, net revenue rose 8 percent to $1.56 billion, exceeding analysts’ estimates of $1.52 billion, according to data compiled by LSEG.
The San Francisco-based company has also been trying to broaden its appeal among higher-income shoppers, and its baggy styles have proved popular with affluent Gen Z shoppers. It is selling its new line of $300 jeans in more stores this year as it seeks to tap demand for premium denim.
CEO Michelle Gass said on a post-earnings call that Levi’s still had an opportunity to capture a “sizable premium segment” it has not yet fully tapped. She said the company’s premium Blue Tab denim line was still in its early stages but gaining traction. “As the denim leader, we should have our fair share of the premium denim market,” Gass said.
Gass said shoppers were gravitating toward loose silhouettes as well as newer products such as button-down shirts and sweaters. Women’s clothing sales were especially strong, she said.
Still, the company’s direct-to-consumer business — that accounts for half its sales — continues to skew toward middle- and lower-income consumers, according to Michael Gunther, senior vice president of research and market intelligence at Consumer Edge, which tracks US card spending at Levi’s owned stores and online channels.
This group of shoppers has cut back on discretionary spending as gas and grocery bills have mounted.
Gass said while shoppers across income cohorts had shown resilience in their spending, the company was still “mindful of the external environment.”
Retailers that cater to less affluent shoppers, like Gap and American Eagle Outfitters, in May pointed to weakness in parts of their women’s apparel businesses, with softer demand for dresses and bottoms.
In Levi’s largest market, the Americas, sales rose 9 percent in the quarter. Asia posted a 10-percent increase, while sales in Europe slowed dramatically from the first quarter and a year earlier, rising 4 percent.
It now expects fiscal 2026 net revenue to grow in the range of 7.0 percent to 7.5 percent, compared with its prior forecast of a 5.5-percent to 6.5-percent rise.
Levi’s also increased its dividend to shareholders and raised its adjusted earnings per share in the range of $1.46 to $1.52, compared with its prior forecast between $1.42 and $1.48.
Analysts on an average expect $1.50 profit per share.
