Levi Strauss raised its full-year adjusted earnings per share guidance following a boost from tariff refunds, increasing the expected range to $1.54-$1.56 from the prior $1.46-$1.52. Despite this, the company lowered its net revenue growth projection to the lower end of the previously forecasted range, now anticipating around 7%. The organic revenue growth outlook remains more optimistic at about 6%, aligning with the high end of earlier expectations. Shares of Levi Strauss dropped nearly 4% after the guidance update.

In the third quarter ending August 30, Levi Strauss posted net revenues of approximately $1.61 billion, up 4% year-over-year, with a 4% increase in the Americas segment. However, U.S. revenue dipped by 1%, and direct-to-consumer sales were flat despite accounting for 45% of total net revenue. Wholesale revenues grew 6% during the quarter, and the operating margin rose significantly to 13.8% from 10.8% a year earlier, helped by a 4.9% boost from tariff refunds.

The company reported adjusted earnings per share of 37 cents in Q3, slightly surpassing analyst estimates of 36 cents, while revenue slightly missed expectations of $1.62 billion. Levi’s quarterly net income declined to $168.6 million, or 43 cents per share, down from $218.1 million, or 55 cents per share, in the same period last year. CEO Michelle Gass noted that while the overall business showed strength, the direct-to-consumer segment underperformed, and targeted measures have been put in place to address these issues.

Levi Strauss also announced leadership changes, with John Vandemore set to become chief financial officer on November 1, succeeding Harmit Singh who is retiring. Despite the revenue challenges, Levi continues to see broad growth across its product lines, including its core Levi’s brand and premium Blue Tab collection. The company is also reinvesting part of its tariff refund windfall, including 5 cents per share allocated to enhance marketing and promotional efforts during the upcoming holiday season.