Shares of Levi Strauss & Co. (LEVI, Financials) fell 8% to close at $12.42 on Tuesday after the company reported a 9% increase in organic net revenue for the fiscal first quarter of 2025, led by continued growth in its Direct-to-Consumer business.
The stock declined another 0.9% in after-hours trading to $12.31 as investors reacted to flat wholesale growth forecasts and tariff-related concerns.
The company said Direct-to-Consumer revenue rose 12% during the quarter, while wholesale sales increased 5%. U.S. revenue grew 8%, and international markets gained 9%. Women's apparel expanded by double digits for the second straight quarter and now makes up 38% of total revenue. Non-denim bottoms account for 35% of overall sales.
Gross margin reached a record 62.1%, a 330 basis point year-over-year increase, supported by lower product costs, a favorable channel and brand mix, and higher full-price sell-through. Adjusted earnings before interest and taxes margin rose 400 basis points to 13.4%. Adjusted diluted earnings per share came in at $0.38, up 52% from a year ago.
Levi Strauss reaffirmed its full-year guidance for 3.5% to 4.5% organic net revenue growth and forecast second-quarter adjusted diluted earnings per share between $0.11 and $0.13. Gross margin is expected to improve by approximately 100 basis points for the year, with selling, general and administrative expenses projected to remain around 50% of revenue.
The company said Direct-to-Consumer sales now contribute 52% of global revenue, up from 50% in the prior year. E-commerce revenue climbed 16%, marking the segment's 12th straight quarter of growth.
Inventory levels rose 7% from the year-ago quarter, which the company described as healthy and aligned with anticipated demand. The majority of revenue gains were attributed to higher volumes, with the remainder from pricing.
Management flagged potential risk from newly announced tariffs but said it expects to manage the impact through vendor negotiations, cost structure adjustments, and selective pricing. The company sources from 28 countries.
Executives reiterated their confidence in Levi Strauss' strategic transition toward a DTC-first model, emphasizing the strength of the women's segment and international momentum, while acknowledging broader macroeconomic headwinds.
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