Levi Strauss shares slide despite strong results — the real reason behind the drop

Levi Strauss (LEVI) shares fell about 12% even though the company reported strong third-quarter results. The main reason for the drop was the company’s cautious outlook for the current quarter because of new tariffs increasing costs.

CFO Harmit Singh told analysts on the earnings call that management expects a 100 basis point drop in fourth-quarter gross margin due to new duties and the effect of a 53rd week in the year, according to AlphaSense.

Levi Strauss earnings

When compared against the predicted EPS by analysts, which was at $0.41, $0.36 to $0.38 is what the company is expecting in this quarter, as per Visible Alpha, as stated in the report by Investopedia. Levi Strauss beat investor estimates by reaching an adjusted EPS of $0.34 and revenue of $1.54 billion.

Also, sales grew, by 6% to $806 million in Americas, Europe up 5% to $426 million, and Asia up 12% to $278 million. The Beyond Yoga brand also saw sales increase 2% to $33 million. Levi raised its full-year forecast for adjusted EPS to $1.27–$1.32, up from $1.25–$1.30, and revenue growth to 3% from 1–2%.

Levi tariffs impact

Higher tariffs may make Levi’s jeans and other products more expensive as the company faces margin pressure, according to the report by Yahoo Finance. Even with the stock drop after earnings, Levi Strauss shares are still up 25% year-to-date. Investors reacted negatively because the future profit margins and earnings might shrink due to tariffs and extra costs, even though current sales and earnings are stron

FAQs

Q1. Why did Levi Strauss shares drop even after strong earnings?

Shares fell because the company gave a cautious forecast for the next quarter due to higher tariffs and rising costs.

Q2. How did Levi Strauss perform in the third quarter?

Levi Strauss reported strong third-quarter results with adjusted EPS of $0.34 and revenue of $1.54 billion, both above estimates.