-- Levi Strauss (LEVI) shares rose early Wednesday as the denim maker lifted its full-year outlook and reported an unexpected year-over-year increase in fiscal first-quarter earnings.
The company now anticipates adjusted earnings to be in a range of $1.42 to $1.48 per share for fiscal 2026, up from the previous guidance of $1.40 to $1.46, it said late Tuesday. Revenue is pegged to grow by 5.5% to 6.5%, compared with prior projections for a gain of 5% to 6%. The current consensus on FactSet is for non-GAAP EPS of $1.47 and sales of $6.65 billion for the fiscal year.
"Our great start to the year in (the first quarter) and positive quarter-to-date trends, give us the confidence to raise our full-year sales, margins and EPS guidance even as we remain prudent about the external environment," Chief Financial Officer Harmit Singh said in a statement.
The stock jumped 12% in the most recent premarket activity.
The full-year guidance assumes tariffs higher than current duties, and the company expects results to benefit if the current rates remain in place.
In February, the US Supreme Court invalidated President Donald Trump's reciprocal tariffs imposed under the International Emergency Economic Powers Act. Following that decision, Trump announced a 10% global tariff, which he later said would rise to 15%.
"If the 10% tariffs currently being charged stay in place for the rest of this fiscal year, we believe there could be an incremental benefit to our current outlook of approximately $35 million to (cost of goods sold) and $0.07 to EPS," Singh said during an earnings call, according to a FactSet transcript.
For the three months ended March 1, Levi Strauss' adjusted EPS rose to $0.42 from $0.38 the year before, defying the average analyst estimate for a decline to $0.37. Revenue advanced 14% to $1.74 billion, ahead of the Street's view for $1.65 billion. Organic sales improved 9% on a yearly basis.
"We delivered very strong financial performance in the first quarter driven by broad-based growth across channels, regions and categories," Chief Executive Michelle Gass said in the earnings release.
The direct-to-consumer channel saw sales incline 16%. E-commerce jumped by 21% while wholesale net revenue moved 12% higher. Revenue grew across the Americas, Europe and Asia, with the latter two recording double-digit gains. Gross margin declined to 61.9% from 62.1% in the prior-year quarter, amid tariff-related headwinds, offset by price increases and less promotional activity, according to the company.
The apparel retailer expects adjusted EPS to come in between $0.22 and $0.24 for the ongoing quarter and revenue to rise by 4% to 5%, Singh told analysts on the call. The Street is looking for non-GAAP EPS of $0.23 and sales of $1.51 billion.
"There is no change in underlying demand trends between quarter one and quarter two," according to Singh. "We expect to fully offset the impact of tariffs through our various mitigation efforts."
In a separate statement, Levi Strauss announced that it has launched a search process for a new finance chief, with Singh to serve in the role until a successor is found. Singh will transition to special advisor and retire after a successor is appointed.