Levi Strauss Raises Prices and Profits — But the Stock Sells Off
Levi Strauss (NYSE: LEVI) delivered a clean earnings beat for the third quarter — stronger profit margins, solid revenue growth, and an upgraded outlook. Yet shares fell sharply in after-hours trading, reflecting cautious guidance and trader rotation out of retail ahead of the holiday quarter.
Quarter Highlights
- Adjusted EPS: $0.34 vs $0.31 expected
- Revenue: $1.54B vs $1.50B expected
- Gross Margin: 61.7% (up 110 bps YoY)
- Full-Year EPS Outlook: $1.27–$1.32 (raised from $1.25–$1.30)
- Full-Year Revenue Growth: +3%, up from prior 1–2%
CEO Michelle Gass said Levi’s targeted price increases have not hurt demand — a critical point for investors worried about elasticity amid consumer fatigue. “We’ve been surgical and thoughtful,” Gass told CNBC, adding that strong brand equity allows the company to hold margins even under tariff pressure.
Margins and Strategy
Levi’s gross margin expansion came from higher direct-to-consumer sales, less discounting, and premium price positioning.
Online and owned-store sales rose 11%, while women’s apparel grew 9%. The company continues to diversify beyond denim — with tops now making up nearly 40% of total sales.
Tariffs remain a wildcard: Levi’s assumes U.S. import duties at 30% and global duties at 20% through year-end. The company has restored its pre-tariff margin outlook but remains “conservative” about Q4 spending trends.
Trader’s Take
- Post-Earnings Reaction: Despite the beat, LEVI sold off 6% after hours — a likely “sell-the-news” event after a 42% year-to-date gain.
- Technical Levels: Watch $21.40 support (prior breakout level). Breakdown could test $19.80–$20.00.
A recovery through $22.75 could reestablish upside momentum toward $24.50. - Intraday Bias: Expect volatile opens driven by retail ETF rotation (XRT). Watch pre-market VWAP behavior — if buyers defend $21, scalpers can lean long with tight stops.
- Swing Traders: Favor entries near prior support with risk defined under $19.80. A close above $23 confirms continuation into the holiday retail cycle.
Sector Implications
Levi’s results echo broader consumer trends: resilient demand at higher price points and margin expansion through direct sales. Competitors such as Lululemon (LULU), Ralph Lauren (RL), and Gap (GPS) may benefit from similar pricing dynamics if consumer discretionary spending holds up through Q4.
However, traders should note: if Levi’s weakness persists despite strong fundamentals, it may signal early exhaustion in the retail rally.
Bottom Line
Levi Strauss just proved it can raise prices without losing customers — a rare feat in 2025’s tariff-driven retail environment.
The fundamentals look solid, but the chart is flashing caution. For traders, the next few sessions will reveal whether this is a simple earnings shakeout — or the start of sector-wide profit taking.