Key Highlights

  • Full-year guidance raised for the second consecutive quarter
  • Reported net revenue growth now guided to 7% to 7.5%
  • Adjusted diluted EPS guidance raised to $1.46-$1.52 from $1.42-$1.48
  • Adjusted EBIT margin guided to approximately 12% for the year
  • Q3 guidance calls for 4-5% revenue growth and EPS of $0.34-$0.36
  • Tariff assumptions held steady at 30% for China, 20% for rest of world

Levi Strauss & Co. raised its full-year financial outlook for the second consecutive quarter, reinforcing management's confidence in the company's ongoing turnaround despite a mixed market reaction to the underlying second-quarter earnings report. The upgraded guidance reflects sustained strength across the company's denim lifestyle strategy, even as investors focused more narrowly on whether the new targets cleared already-elevated Street expectations.

Under the revised outlook, Levi's now expects reported net revenue growth of 7% to 7.5% for the full fiscal year, with organic revenue growth guided to 5.5% to 6%. Adjusted EBIT margin is projected at approximately 12%, and adjusted diluted earnings per share are now guided to a range of $1.46 to $1.52, up from the prior range of $1.42 to $1.48 issued just one quarter earlier. The consistency of upward revisions across consecutive quarters suggests management has visibility into genuine business momentum rather than simply managing expectations opportunistically.

That momentum is visible across several parts of the business. The women's category grew 11% in the second quarter, with granular category data showing shorts up 11% and white denim surging 70% — performance that reflects successful product and marketing execution beyond the company's traditional core denim bottoms business. Non-bottoms categories, which include shirts, jackets, and other apparel extensions, contributed roughly one-third of total top-line growth during the quarter, a proportion that illustrates how far the company's diversification strategy has progressed from its historical reliance on classic five-pocket jeans.

Financial discipline has accompanied the growth. Adjusted free cash flow rose nearly 60% year-over-year to $231 million, providing the company with meaningful flexibility to continue funding brand marketing, digital investment, and potential shareholder returns without straining the balance sheet. That cash generation strength, combined with adjusted EBIT margin expansion of 70 basis points to 9% in the quarter just reported, gives management a credible foundation for the raised full-year targets.

Looking ahead to the third quarter, Levi's guided to reported and organic net revenue growth of 4% to 5%, a deceleration from the second quarter's pace that likely reflects both a tougher prior-year comparison and normal seasonal patterns in the apparel retail calendar. Gross margin is expected to expand approximately 10 basis points to 61.8%, with adjusted EBIT margin guided to approximately 11.9% and adjusted diluted EPS projected between $0.34 and $0.36.

Notably, the company's guidance continues to exclude a meaningful potential tailwind: approximately $80 million in potential tariff refunds have been left out of the outlook entirely, even as full-year tariff assumptions remain unchanged at 30% for goods sourced from China and 20% for the rest of the world. That conservative treatment of tariff refunds — a stark contrast to peers such as PepsiCo, which have explicitly built tariff refund benefits into their own guidance — suggests Levi's management may be preserving flexibility for a further guidance raise later in the year should those refunds materialize, offering a potential source of upside that current Street estimates may not fully reflect.

How much did Levi Strauss raise its full-year EPS guidance?

The company raised adjusted diluted EPS guidance to a range of $1.46 to $1.52, up from the prior range of $1.42 to $1.48, marking the second consecutive quarterly guidance increase.

Why does Levi Strauss's guidance exclude potential tariff refunds?

Management left approximately $80 million in potential tariff refunds out of its outlook entirely, a conservative approach that could provide upside to guidance later in the year if those refunds materialize.

This article is for informational purposes and does not constitute investment advice.