Levi's Had a Rough Quarter, and the Tariff Refund Check Covered for It
Wholesale strength and an $80 million tariff refund papered over a surprise miss at Levi's own stores, where shoppers still aren't sure about those loose-fit jeans.
Levi's posted a messier-than-expected third quarter: net revenue rose 4% year over year to $1.6 billion, but net income fell nearly 23% to about $169 million. The company's own direct-to-consumer channel, usually its strongest story, grew just 2%, with comparable sales flat, in what Wells Fargo flagged as the brand's first net revenue miss in two years.
Two things kept the quarter from looking worse. Wholesale revenue climbed 6%, with growth across every region and particular strength in Europe and Asia, and Levi's collected roughly $80 million in tariff refunds, nearly the full amount it expected, which alone added 370 basis points to gross margin. CFO Harmit Singh called the refunds "timely," and the company plans to pour about three-quarters of that money back into marketing, supply chain upgrades, and holiday promotions.
CEO Michelle Gass pinned part of the DTC softness on the brand's own styling bet, saying an overemphasis on loose fits collided with U.S. shoppers quietly shifting back toward low-rise, plus a hot European summer that kept store traffic down. "The good news is the team got after it very quickly, and we sharpened our focus," Gass said, which is retail-speak for: we bet on the wrong silhouette, and we're already walking it back.
Source: Retail Dive
Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →
