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Investing.com - Citi has raised its price target on Levi Strauss & Co . (NYSE:LEVI) to $22.00 from $19.00 while maintaining a Neutral rating following the company’s better-than-expected quarterly performance.
The denim maker reported revenue growth of 9.0% on a constant currency basis and 6.5% as reported, significantly outpacing consensus expectations of 0.8% growth. The strong performance was primarily driven by robust sales in Europe and the United States. The company maintains impressive gross profit margins of 60.8% and has demonstrated solid financial health with a current ratio of 1.5x.
Asian market sales declined 0.8% compared to consensus estimates of 1.5% growth, as management continues efforts to reset operations in that region. Despite this underperformance in Asia, Levi Strauss saw strong results across its other channels and geographical markets.
Following these results, Levi Strauss management raised its fiscal year 2025 earnings guidance from $1.20-1.25 to $1.25-1.30 per share, compared to the consensus estimate of $1.23. The company noted that potential tariff headwinds are expected to impact earnings by only $0.02-0.03 per share.
Citi’s analysis suggests the revised guidance may still be conservative, given that Levi Strauss exceeded its first-half guidance by approximately $0.19 per share. The investment bank has set its own earnings estimate at $1.32 per share, above the company’s updated guidance range.
In other recent news, Levi Strauss & Co reported a robust financial performance for the second quarter of 2025. The company’s earnings per share (EPS) reached $0.22, significantly surpassing the forecasted $0.13, resulting in a 69.23% earnings surprise. Revenue also exceeded expectations, hitting $1.4 billion compared to the anticipated $1.37 billion. Levi Strauss achieved a record gross margin of 62.6%, reflecting a 140 basis point increase year-over-year. The company has raised its full-year organic net revenue growth guidance to 4.5-5.5%, with strategic initiatives including expanding the women’s category and enhancing the direct-to-consumer business.
Additionally, Levi Strauss announced the sale of its Dockers brand to Authentic Brands Group, a move that aligns with the company’s strategic focus on the Levi’s brand. The company’s direct-to-consumer business now accounts for over 50% of total sales, showcasing its strategic shift. Furthermore, the wholesale business experienced growth, with a 7% increase, while the international segment grew by 10%, driven by strong performance in Europe. Analyst firms, such as BNP Paribas (OTC:BNPQY), inquired about the company’s wholesale revenue projections, to which Levi Strauss responded with confidence in its future performance, citing positive order books for the remainder of the year.
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