Levi Strauss forecasts annual profit below estimates as tariffs weigh

Core Viewpoint - Levi Strauss raised its full-year profit forecast but it fell short of Wall Street expectations, leading to a 6% decline in shares during premarket trading [1] Group 1: Financial Performance - The company now expects fiscal-year 2025 adjusted profit per share in the range of $1.27 to $1.32, an increase from the previous forecast of $1.25 to $1.30, but the midpoint is below the analyst estimate of $1.31 [1] - Levi Strauss reported a 7% rise in net revenue for the quarter ended August 31 to $1.54 billion, surpassing analysts' estimate of $1.50 billion [4] - Adjusted profit came in at 34 cents per share, up from 33 cents per share in the same period last year [5] Group 2: Impact of Tariffs - The forecast assumes U.S. tariffs will remain at 30% for China and 20% for other countries through the year-end [2] - Tariffs impacted the company's gross margins by 80 basis points in the reported quarter, with an expected impact of 130 basis points in the fourth quarter [2] Group 3: Strategic Initiatives - The company has undertaken modest price hikes and secured inventory ahead of the key holiday season to mitigate disruptions from volatile trade policies [3] - Levi has focused on full-price sales through its direct-to-consumer channel, broadened product offerings, and maintained tight control over stock-keeping units (SKUs) [3] Group 4: Market Demand - Robust international demand helped cushion some tariff pain, with quarterly revenues in Asia and Europe growing 12% and 5%, respectively [4] - Globally, direct-to-consumer sales witnessed 9% growth, while online sales jumped 16% [4] - Operating margin improved to 10.8% from 2.3% a year earlier, driven by higher direct-to-consumer and full-price sales [5]