Levi Strauss lifts outlook after second-quarter sales beat estimates

Levi Strauss reported second-quarter revenue of $1.56 billion and adjusted earnings of 28 cents a share, exceeding analyst estimates compiled by LSEG on both measures. The denim maker also raised its full-year outlook and dividend after sales increased about 8% from a year earlier.

Analysts surveyed by LSEG had expected revenue of $1.52 billion and adjusted earnings of 24 cents a share. For the three months ended May 31, Levi reported net income of $87.3 million, or 22 cents a share, compared with $67 million, or 17 cents a share, in the same period a year earlier.

The San Francisco-based company now expects full-year adjusted earnings per share of $1.46 to $1.52, compared with its previous range of $1.42 to $1.48. The top end of the new range is above the $1.50 a share expected by analysts, according to LSEG.

Levi also increased its full-year sales growth forecast to a range of 7% to 7.5%, from a prior estimate of 5.5% to 6.5%. LSEG said analysts had expected full-year revenue growth of 6.6%.

Chief Financial Officer Harmit Singh told CNBC that the company expects about half of the projected sales growth to come from higher prices and the other half from unit sales. That distinction matters for retailers because revenue can rise when companies charge more, sell more goods, or both. Unit-led growth can indicate that consumer demand is expanding, while price-led growth can reflect pricing power or inflationary effects.

Chief Executive Michelle Gass told CNBC that Levi’s core consumer remained resilient, including against a backdrop of higher gasoline prices. She said about two-thirds of the company’s sales growth in the quarter came from units rather than price increases, supporting management’s decision to lift guidance and raise the dividend.

“Our demand remains healthy,” Gass told CNBC. “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 results point to continued demand for Levi’s products across several customer segments, according to the company’s executives. The guidance increase suggests management expects the momentum from the second quarter to carry through the remainder of the fiscal year, though the company’s projections remain subject to consumer spending trends and cost pressures.

Levi’s outlook also places more weight on volume growth than many retailers have been able to show during periods of elevated household costs. The company’s own comments indicate that pricing remains part of the sales expansion, while stronger unit sales played a larger role in the latest quarter.

This story draws on original reporting from CNBC.