Levi's Q1 To See EPS Growth, Revenue Dip, And Tariff Edge, Says Analyst

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on Wednesday on the shares of Levi Strauss & Co LEVI with an unchanged price forecast of $23.00.

LEVI is set to release its first-quarter fiscal 2025 earnings on April 7 after market close. The analyst expects EPS of $0.28, up from $0.26 last year, aligning with consensus estimates.

Revenue is projected to decline 1.3% year-over-year to $1.537 billion, slightly below the consensus estimate of $1.542 billion. Growth of 1% is anticipated in the Americas and Other Brands segments, while Europe and Asia are expected to see declines of 2% and 7%, respectively.

Gross margin is estimated to improve by 180 basis points to 60.0%, slightly exceeding the 59.9% consensus. Operating margin is expected to reach 10.4%, up from 9.0% last year, and in line with consensus projections.

For fiscal 2025, the company expects reported revenue to decline by 1%-2% from $6.355 billion in FY24, while organic revenue is projected to grow 3.5%-4.5%.

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Levi expects FY25 EPS between $1.20-$1.25, aligning with or slightly below last year’s $1.25, while consensus estimates predict EPS of $1.25 with a 1% revenue decline.

LEVI sees tariffs as a potential competitive advantage. The company sources from over 25 countries, with less than 1% of imports coming from China, down from historical levels of 15%-16% and about 5% from Mexico, said the analyst.

Since most production in China and India is for local markets, the recently imposed 25% tariffs in 2025 are expected to have minimal impact.

LEVI rebounded in fourth-quarter FY24 with strong revenue growth after missing expectations in the second and third-quarter. All regions and channels saw notable sequential improvements, with record gross margins achieved without increased promotions.

Looking ahead, the company’s FY25 guidance remains conservative, with lower-than-expected revenue and EPS forecasts, partly due to FX headwinds. Meanwhile, EBIT margin projections offer upside potential.

Levi’s remains well-positioned long-term, benefiting from a stabilizing U.S. denim market, growing direct-to-consumer sales, and product innovation, noted the analyst.

The company has streamlined operations in FY25 by exiting non-core businesses, including Denizen and European footwear, while preparing to sell Dockers. This shift aims to enhance profitability and reduce revenue volatility.

Price Action: LEVI shares traded higher by 1.89% at $16.69 at last check Wednesday.

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