Levi's boosts its sales outlook, defying concerns about the impact of the Iran conflict

By Bill Peters

The jeans maker says shoppers are snapping up its new gear - and it became the latest clothing company to say the TV series 'Love Story' was helping sales

Levi Strauss reported quarterly results after Tuesday's closing bell.

Shares of Levi Strauss climbed in after-hours trading Tuesday, after the jeans maker raised its sales and profit outlook despite concerns about surging gas prices and the Iran war - citing its efforts to offer a wider array of denim gear and to sell more directly to consumers.

The company also said that it had started a search for a successor to CFO Harmit Singh, who plans to retire after 13 years in the role. Singh will stay on at Levi Strauss (LEVI) until it finds his replacement.

The denim giant provided the upbeat outlook, as well as its fiscal first-quarter results, as Wall Street tries to assess the war's impact on consumer demand. The stock tumbled 16.6% in March after the Iran conflict began, its worst monthly performance since it dropped 19.7% in June 2024.

But on Levi Strauss's earnings call, CEO Michelle Gass said the company's first-quarter results provided optimism about its forecast for the year overall, as it expands its selection beyond its iconic jeans and as consumers buy up new items like dresses, blouses, modern takes on its 501 jeans and throwbacks to previous decades.

"While we remain thoughtful about the external environment, we're confident in the direction we're headed as we move through the year and beyond," Gass said.

In March, Levi Strauss downplayed the impact of the Iran war. Singh said then that the Middle East comprised less than 1% of its total business, and that the amount of product it got via the Strait of Hormuz - a key shipping lane that Iran has put under blockade - was "very, very minor."

Last week, Nike (NKE) also said it hadn't yet seen any signs that the conflict had affected demand in North America, even as the sneaker maker faces issues elsewhere. Other retailers have also downplayed the potential impact of higher gas prices, at least for now.

Levi's stock jumped more than 9% in Tuesday's extended trading, after closing the regular session up 0.3%.

The company said it expects sales growth of 5.5% to 6.5% for its current fiscal year, which ends on Nov. 29. That's up from a prior forecast of a 5% to 6% gain.

Levi Strauss also raised its outlook for adjusted earnings per share for the year to $1.42 to $1.48, from $1.40 to $1.46 previously. And it now expects gross margin, a measure of the profitability of sales, to be "flat to slightly up" when compared with the prior year - a bit better than earlier expectations for those margins to be flat.

That outlook assumes that U.S. tariffs stay at 30% on imports from China, and at 20% on imports from everywhere else. Singh said the outlook didn't factor in the Supreme Court's ruling against President Donald Trump's emergency-powers tariffs in February, or tariffs that the U.S. has put in place since.

Singh added that if the 10% tariffs currently being charged by the U.S. stay in place for the rest of the fiscal year, Levi's earnings-per-share outlook could improve by around 7 cents.

For the fiscal first quarter to March 1, the company reported adjusted EPS that rose to 42 cents, from 38 cents in the same period last year and above analyst expectations for 37 cents. Sales rose 14% year over year to $1.74 billion, topping expectations for $1.65 billion.

Sales through Levi's own physical and online stores - its direct-to-consumer, or DTC, business - rose 16%, while sales in its business with retailers rose 12%. However, operating margin slipped to 11.4%, due to costs related to tariffs and extra advertising.

The company's DTC segment now represents around half of its business overall. Women's clothing helped drive sales during the quarter, Levi's executives said Tuesday. And during the first quarter, 70% of new U.S. e-commerce orders came from Gen Z or millennial consumers, Gass said.

The CEO also cited a jump in demand for Levi's boot-cut 517 jeans - often worn by the late Carolyn Bessette Kennedy, and featured heavily in "Love Story," the popular TV miniseries set in the 1990s that dramatizes her relationship with her husband, John F. Kennedy Jr. Last week, PVH (PVH) - the owner of Calvin Klein, where Bessette worked - also said the show had helped prop up demand.

Through Tuesday's close, Levi's stock had slipped 5% in 2026, though it had jumped 32% over the past 12 months.

-Bill Peters

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04-07-26 1945ET