Levi Strauss said it is using a portion of its tariff refunds to reignite its direct-to-consumer business, after the segment disappointed in the third quarter. Levi’s direct-to-consumer business fell short of internal expectations due to lower sales in the U.S. and Europe, Chief Executive Michelle Gass said. Rising competition among low-rise jeans sellers created pressure, but the company is regaining momentum heading into the holiday season.
“While DTC pressure was most pronounced in our women’s bottoms business, we have moved quickly to increase support behind winning trends and strengthen execution,” Gass told investors. Levi had shaped its U.S. back-to-school campaign around baggy jeans, but the market shifted sharply toward low-rise styles. “We pivoted into low,” Gass said.
Revenue rose 4% to $1.61 billion, just below the $1.62 billion forecast. Direct-to-consumer sales were down 1% in the U.S. and 2% in Europe. Tariff refunds contributed 16 cents a share to earnings in the third quarter, with about 5 cents redeployed to support the business. Levi intends to put $60 million of its refunds back into the business this year, focusing on demand generation and marketing.
Income from continuing operations was $168.6 million, or 43 cents a share, compared with $122.0 million a year earlier. Adjusted per-share earnings were 48 cents, ahead of the 36 cents anticipated. Levi raised its full-year adjusted earnings per share outlook to $1.54 to $1.56, and expects sales to increase by 7%.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing