Business
Levi Strauss raises prices, helping to boost profit and outlook
Levi Strauss‘s profits are growing more than Wall Street expected despite higher costs from tariffs, thanks to targeted price increases and a shift away from wholesalers, the company said Thursday as it reported fiscal third quarter results.
During the quarter, Levi’s gross margin grew 1.1 percentage points to 61.7%, up from 60.6% in the year-ago period and better than the 60.7% analysts had expected, according to StreetAccount.
In an interview with CNBC, CEO Michelle Gass said the company has started to raise the price of some of its jeans and clothes and will hike more prices in the U.S. and other markets next year.
“As we’ve been taking these targeted actions, we’ve not seen an impact to demand. We’ll of course, stay very, very close to that but … we’re taking a surgical, thoughtful approach on any pricing,” said Gass. “We know that we’re a brand that is known for great quality and value. We don’t take that for granted. We know we have to earn that every day.”
Finance chief Harmit Singh added demand is “really strong” and most of the company’s revenue growth is not coming from price increases.
Price hikes are helping Levi’s margins, but the company is also discounting less and selling more through its own website and stores instead of wholesalers, which comes at a higher margin.
The denim maker said its strong results led it to raise its full-year outlook, but added it’s still taking a “prudent” and “conservative” look at the rest of the year as it navigates ongoing macroeconomic volatility, Singh said.
Here’s how Levi’s performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: 34 cents adjusted vs. 31 cents expected
- Revenue: $1.54 billion vs. $1.50 billion expected
Though Levi’s posted better-than-expected results, shares dropped more than 6% in extended trading. Its stock had climbed about 42% this year through Thursday’s close.
The company’s reported net income for the three-month period that ended Aug. 31 was $218 million, or 55 cents per share, compared with $20.7 million, or 5 cents per share, a year earlier. Excluding one-time items related to impairment and restructuring charges, among other expenses, Levi posted adjusted earnings of 34 cents per share.
Sales rose to $1.54 billion, up 7% from $1.44 billion a year earlier.
Levi’s is now expecting its full year sales to rise 3%, up from its prior guidance of between 1% and 2% growth, far exceeding expectations of a 2.9% decline, according to LSEG.
It’s expecting its full year adjusted earnings per share to be between $1.27 and $1.32, up from a prior range of between $1.25 and $1.30. At the high end, the outlook is in line with Wall Street estimates of $1.31 per share, according to LSEG.
The jeans company said it’s expecting its operating margin to be between 11.4% and 11.6%, which is also in line with expectations of 11.6%, according to StreetAccount. It’s now expecting its gross margin to rise by 1 percentage point, which is the outlook Levi’s delivered earlier this year before it factored tariffs into its forecast. At the time, its guidance didn’t reflect any tariff impact. The following quarter, it cut its gross margin guidance by 0.2 percentage points because of the new duties.
Now, Levi’s is returning to that original outlook, as long as U.S. tariffs on imports from China remain at 30% and rest-of-world duties stay at 20% for the remainder of the year.
Under the direction of Gass, Levi’s has been working to grow its direct sales, expand beyond jeans and win over more female shoppers – strategies that helped the business grow both its top and bottom lines.
During the quarter, direct-to-consumer revenue, or sales from Levi’s website and stores, grew 11%, driven by strength in the U.S. market, while women’s was up 9%. Levi’s is benefiting from strong momentum in the denim category, but the company is growing its assortment outside of just jeans, which gives it a hedge if fashion trends change.
Other types of clothes beyond denim bottoms, including tops, now make up nearly 40% of the business. The company’s efforts to sell more tops is also resonating with consumers, as that category was up 9% during the quarter.
A display board shows canceled flights to Dubai and Doha amid regional airspace closures at Noi Bai International Airport, amid the U.S.-Israel conflict with Iran, in Hanoi, Vietnam, March 2, 2026. Picture taken with a mobile phone.
Thinh Nguyen | Reuters
Airline and travel stocks slipped Monday after airspace closures throughout the Middle East forced carriers to cancel thousands of flights, disrupting trips as far as Brazil and the Philippines.
Cruise lines stocks also fell sharply, with Royal Caribbean Cruises dropping 3% and Carnival Corp. losing more than 7%.
Norwegian Cruise Line Holdings‘ stock fell 10% after its earnings call disappointed investors. Elliott Investment Management said last month that it had built a more than 10% stake in the company and that it’s seeking changes. New CEO John Chidsey told analysts that “our strategy is sound, our execution and coordination have not been, and a culture of accountability is essential and necessary going forward.”
Oil prices also rose, potentially driving up airlines’ biggest cost after labor. Flights through the Middle East were grounded, including to destinations like Tel Aviv and Dubai.
United Airlines, which has the most international exposure of the U.S. carriers, fell nearly 3%. Service to Tel Aviv, Israel, one of the airline’s most profitable routes, was halted, but airlines were also was forced to pause flights to Dubai, in the United Arab Emirates, one of the busiest airport hubs in the world. Dubai is also a home base for the airline Emirates.
Shares of American Airlines lost 4% while Delta Air Lines fell 2%.
More than 11,000 Middle East flights have been canceled since the U.S.-Israeli strikes this weekend, according to aviation-data firm Cirium.
International travel has been a bright spot in the travel sector. In January, international air travel demand jumped 5.9% from a year ago while domestic flight demand was nearly flat, the International Air Transport Association, an airline industry group, said in a report Monday.
— CNBC’s Contessa Brewer contributed to this report.
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Gas prices have leapt at the fastest pace since the outbreak of war in Ukraine, after Qatar halted production of liquified natural gas after attacks by Iran.
Oil prices also soared and global financial markets reeled from the fallout of an intensifying conflict between Iran and US-Israeli forces.
European whole gas prices soared by 52% on Monday, marking the sharpest rise since prices were pushed dramatically higher by the Russian invasion of Ukraine in March 2022.
The surge came after Qatar’s state-backed energy company QatarEnergy said it “ceased production” because of attacks on its facilities.
Qatari ministers had said earlier on Monday that an Iranian drone had attacked one of the company’s production facilities.
Qatar is a major producer of LNG, cooled gas which can be transported via ships, responsible for about a fifth of global supplies.
On Monday in London, the price of natural gas for delivery in April was up by about 43% to 115p per therm.
In the UK, gas prices are a key driver for the cost of domestic energy bills, indicating that a sustained spike could affect households in the coming months.
Neil Wilson, Saxo UK investor strategist, said: “Qatar is a top three LNG exporter, controlling roughly a quarter of expected supply over the next decade.
“Looks like Iran’s tactic is to pressure Gulf states so they in turn pressure the US and Israel to back off.
“I am much more concerned about European natural gas prices than oil prices, in terms of seeing a repeat of the 2022 European energy crisis.”
Global financial markets faltered after intense strikes across the Middle East and attacks on ships drove fears of energy supply disruption.
London’s FTSE 100 was weaker as trading was knocked by the growing conflict between Iran and US-Israeli forces.
The blue chip share index shed 130 points, closing 1.2% lower at 10,780.11.
Other European indexes suffered bigger drops with France’s Cac 40 down about 2.2% and Germany’s Dax tumbling 2.4% on Monday.
But it was a more tentative start to trading over on Wall Street with the S&P 500 relatively flat, and Dow Jones dipping by about 0.1% by the time European markets had closed.
Israel launched strikes on Lebanon’s capital Beirut on Monday after missiles were fired by militant group Hezbollah.
The latest strikes came after the US and Israel hit targets across Iran on Sunday as part of an intensifying military campaign which followed the killing of Supreme Leader Ayatollah Ali Khamenei.
Oil supplies could be affected by the conflict after Iran reportedly warned tankers on the strait of Hormuz that no ships would be allowed to pass through.
UK Maritime Trade Operations Centre officials said that two vessels have been struck near to the key trade artery.
The Strait of Hormuz is used by tankers carrying about one fifth of the world’s oil supplies and seaborne gas.
On Monday, the price of Brent crude oil soared by as much as 13%, rising above 82 dollars a barrel, before paring back.
It was 8.4% higher at 79.2 dollars a barrel shortly before 2pm, before easing slightly to be 5.5% higher at 76.9 dollars a barrel by early evening.
Nevertheless, City analysts have said the markets have been relatively contained so far in reaction to the conflict.
Chris Beauchamp, chief market analyst at IG, said: “While we have seen a significant surge in oil prices since markets opened last night, the gains appear contained for now as we wait to see if shipping through Hormuz can continue at lower levels or will be blocked entirely.
“Oil and gas infrastructure in the region has not yet been extensively targeted, keeping oil well south of the 100 dollar barrel range that many expected as a result of the weekend.”
Meanwhile, the pound dipped in value against the US dollar to its weakest level since December.
The fall is partly linked to the strength of the dollar, with investors pouring funds into the US “safe haven” currency.
The pound was down about 0.8% at 1.338 versus the dollar during the day, before parring back some losses to be down around 0.3% at 1.34 against the dollar by early evening.
London stocks were broadly weaker, with travel stocks among those dropping particularly sharply.
Cruise giant Carnival slid by 8%, while airline firm IAG, the parent firm of British Airways, dipped by 7.6%.
Rival Wizz Air, which typically runs flights to Dubai and Abu Dhabi, was also down 7.3% in early trading on Monday, while travel-focused retail groups SSP and WH Smith were also firmly lower.
However, defence stocks were among the gainers, with BAE Systems lifting by 7.4% to 2,268p.
Elsewhere, oil and energy stocks were also stronger – Shell and BP rose by 4.5% and 3.5% respectively as prices lift.
International stock markets also opened weaker after the start of trading, with the Nikkei 225 in Tokyo falling by 1.5% after Asian markets opened.
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