Levi Strauss beat Wall Street's second-quarter targets, but its shares still dropped more than 5% in extended trading.
Higher unit sales, rather than price increases, accounted for approximately two-thirds of the revenue growth. CEO Michelle Gass said, "Our demand remains healthy." She added, "We're seeing strength across our key segments of consumers, so we have our core Levi's, but we're also seeing strength in signature, as well as our new premium blue tab."
The strong quarter led management to raise its full-year outlook. New adjusted earnings per share guidance is $1.46 to $1.52, up from $1.42 to $1.48. At the high end, that's ahead of expectations of $1.50 per share, according to LSEG.
For sales, Levi now expects growth of 7% to 7.5%, up from 5.5% to 6.5%. That's ahead of expectations of 6.6%, according to LSEG.
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Finance chief Harmit Singh said, "roughly equal contributions from price increases and unit volume growth are expected for the remainder of the year."
Even with all the upbeat numbers, Levi shares fell more than 5% in extended trading.
The strong second-quarter performance highlights Levi Strauss's ability to attract a wide range of consumers, from value-conscious buyers to those seeking premium denim. CEO Michelle Gass noted robust demand across the core Levi's brand, the affordable Signature line, and the premium Blue Tab collection. This diversified product portfolio helps the company navigate economic uncertainty.
The raised full-year guidance for both earnings and revenue signals management's confidence in sustained momentum, while the dividend increase underscores healthy cash flow and a commitment to shareholders. Although the stock dipped after hours, such moves are not unusual following a positive earnings surprise, as some investors may lock in gains or react to broader market conditions.
The company's broad appeal - spanning budget-friendly Signature to high-end Blue Tab - gives it a buffer against shifting consumer spending, especially as inflation pressures persist. Gass's comments about resilient demand from core buyers reinforce the view that Levi's brand strength helps maintain sales even when discretionary spending tightens.
The dividend hike reflects Levi Strauss's strong cash generation and its focus on returning value to shareholders. Combined with the improved outlook, the company appears well-positioned to handle ongoing macroeconomic pressures. The after-hours stock dip may be a short-term reaction, but the underlying fundamentals suggest continued momentum.
During a CNBC interview, CEO Michelle Gass stated, "the company's core consumer is proving to be resilient even in the face of higher gas prices."
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