Key Takeaways
- Levi Strauss reported first-quarter profit that topped estimates after the bell Monday.
- Its Dockers business now is classified as “discontinued operations,” as Levi’s made the decision during the first quarter to pursue a sale of the brand after launching a review in October.
- Executives said new tariffs will have a “minimal impact” on Levi’s second quarter, but it could face a larger headwind later in the year.
Levi Strauss (LEVI) reported better-than-expected first-quarter profit and gave a relatively upbeat outlook on the Trump administration’s new tariffs on Monday.
After the bell Monday, Levi’s reported quarterly adjusted earnings per share (EPS) of $0.38, above the $0.28 consensus forecast of analysts polled by Visible Alpha. The company generated $1.53 billion in revenue, excluding some $67 million in sales from the Dockers brand, which is now being classified as “discontinued operations.”
Levi’s said it made the decision during the first quarter to pursue a sale of the brand after launching a review in October.
CEO Michelle Gass said in Monday’s earnings call that the company plans to be “surgical” with any pricing changes forced by the new tariffs, according to a transcript from AlphaSense. Gass said customers have been buying more of Levi Strauss’ premium products in recent quarters, giving the company more pricing power.
Shares initially rose Tuesday but reversed course and were down more than 6% in recent trading.
Levi’s Expects ‘Minimal Impact’ From Tariffs in Second Quarter
Levi’s CFO Harmit Singh said on Monday’s earnings call that the company expects “minimal impact” from tariffs on its second-quarter profit margins, as much of its inventory has already been imported. Singh said the tariffs could be a “significant challenge” later this year, but he and Gass said they are “fluid” and could change.
The company imports products from 20 countries into the U.S., and Gass said Levi’s has created a “task force” to evaluate ways to minimize the potential impacts of tariffs.
In a note following the earnings, JPMorgan analysts upgraded Levi’s stock to “overweight” from “neutral,” while also trimming the stock’s price target to $17 from $19. The analysts cut their price target because they believe tariffs will likely hurt profits this year, but said Levi’s should be able to mitigate an estimated 75% of the cost because of changes to its business since tariffs played a role in the first Trump administration.
UPDATE and CLARIFICATION—This article has been updated with the latest share price and additional information about the revenue result.
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