Levi Strauss & Co., one of the most iconic denim and apparel brands in the world, is riding high in the third quarter of 2025 with better-than-expected profits and a brightened outlook. Despite facing pressures from higher costs, including tariffs, the company’s strategy of raising prices on select products and shifting its sales model towards direct-to-consumer channels has proved highly effective. Levi’s results underscore a key trend in the fashion industry — companies can raise prices without sacrificing demand, especially when the brand has a strong market presence and loyal customers.
The San Francisco-based jeans maker reported a net income of $218 million for the three-month period ending August 31, 2025, up sharply from the $20.7 million it posted a year earlier. This boost in profitability also resulted in a significant increase in earnings per share (EPS), which surged to 55 cents from just 5 cents per share in the same period last year. Adjusted earnings per share, which exclude one-time items such as restructuring charges, were 34 cents, surpassing analysts’ expectations of 31 cents per share.
Levi Strauss also saw revenue rise 7%, reaching $1.54 billion compared to $1.44 billion during the same quarter in 2024. The result was above Wall Street’s consensus estimate of $1.50 billion. These robust numbers came despite the company contending with increased tariff costs that had initially threatened to affect margins.
Price Increases and Strong Demand
A critical factor behind Levi’s strong financial results was the company’s decision to raise prices on some of its products, especially jeans and other apparel items. The price hikes were part of a broader strategy aimed at mitigating higher raw material and production costs, including the ongoing impact of U.S. tariffs on imports from China.
Despite these price increases, the company reported no noticeable drop in demand for its products. CEO Michelle Gass emphasized that Levi’s strategy had been “surgical and thoughtful,” underscoring the brand’s commitment to maintaining high-quality standards. “We’ve been very careful with how we’ve approached pricing,” Gass told CNBC, adding that the brand’s reputation for value and quality had kept consumer demand strong.
Finance Chief Harmit Singh also confirmed that much of the company’s growth was not attributable to price hikes. Instead, Levi’s strong performance stemmed largely from a surge in demand across its various product lines, alongside the company’s strategic shift towards more profitable direct-to-consumer channels. Singh emphasized that Levi’s had seen “really strong” demand, and most of its revenue growth had come from selling products directly through its own stores and website, rather than relying on wholesalers.
Shift Toward Direct-to-Consumer Sales
One of the most significant changes Levi Strauss has undergone in recent years is its increasing reliance on direct-to-consumer sales, which generate higher margins compared to wholesale transactions. The company reported that its direct-to-consumer revenue, including sales through Levi’s website and physical retail stores, grew 11% in the third quarter. This trend is a key part of Levi’s ongoing strategy to build a stronger direct relationship with its customers and reduce its dependency on third-party retailers.
The shift towards more direct sales has also allowed Levi’s to reduce its reliance on discounts, further boosting its profit margins. The company’s gross margin improved by 1.1 percentage points to 61.7%, surpassing analysts’ expectations. This rise in gross margin reflects the company’s increased sales through its own channels, where it has more control over pricing and inventory management.
“We’re seeing consumers engage more with our brand in a direct way,” said Gass. “It’s not just about jeans anymore. People want the full Levi’s experience, and our digital platforms are playing a big role in that.”
Moreover, Levi’s is expanding beyond its iconic denim products. Non-denim items, including tops and outerwear, now account for nearly 40% of Levi’s business, with sales in this category growing 9% during the quarter. This diversification strategy helps the company remain resilient to any potential shifts in fashion trends, ensuring that it can adapt and continue to grow even as the tastes of consumers evolve.
Raising Full-Year Guidance
As a result of its strong performance in the third quarter, Levi Strauss raised its full-year guidance for 2025. The company now expects sales to increase by 3%, a sharp upgrade from its previous forecast of just 1% to 2% growth. This new outlook exceeds analysts’ expectations, which had projected a 2.9% decline in sales. Additionally, Levi’s expects its adjusted earnings per share for the year to fall between $1.27 and $1.32, up from its earlier guidance of $1.25 to $1.30.
Levi Strauss also provided a more positive forecast for its operating margin, predicting it will fall between 11.4% and 11.6% for the full year. The company’s gross margin is expected to rise by 1 percentage point, a return to the original outlook it provided earlier this year, prior to the tariff hikes that had initially weighed on its financial projections.
Though the company’s outlook has improved, Singh noted that Levi’s remains “prudent and conservative” in its forecasting, especially in light of the ongoing global macroeconomic volatility. This cautious approach reflects uncertainty in the broader market, including potential risks from trade policy, inflation, and other economic factors that could impact consumer spending.
The Gender Focus and Expanding Market
Another key driver behind Levi’s success has been its focus on expanding its reach beyond its traditional male customer base. The company has made significant efforts to attract more female consumers, who now make up a larger portion of its customer base. Levi’s women’s business was up 9% during the quarter, which reflects both growing interest in women’s denim and the company’s expansion into other categories such as tops, dresses, and outerwear.
The company’s efforts to revamp its women’s clothing lineup and create more inclusive, stylish options for female consumers have resonated with shoppers. Gass noted that Levi’s is benefiting from its strategy of selling not just jeans but a wide array of clothing that appeals to a broader demographic. Levi’s has also worked to create a more inclusive brand image that connects with diverse groups of consumers, a shift that has paid off with strong growth in its women’s and direct-to-consumer segments.
A Strong Year Ahead
While shares of Levi Strauss dipped by more than 6% in after-hours trading following the announcement, likely due to profit-taking after a 42% increase in stock value earlier in the year, the company remains optimistic about its future. The outlook for the remainder of the year looks strong, and Levi Strauss’ focus on direct sales, strategic price increases, and expanding its product offerings is expected to keep the company on a solid growth trajectory.
As the company continues to navigate the challenges of rising costs and shifting consumer behavior, Levi’s strong brand reputation, focus on quality, and expansion into women’s fashion will likely position it for sustained success in the years to come.
Conclusion: Price Increases as a Strategy for Growth
Levi Strauss’ third-quarter results underscore a key lesson in today’s business environment: with the right combination of product quality, brand loyalty, and strategic pricing, companies can increase prices without losing demand. Levi’s decision to raise prices on select items was clearly a successful strategy, and with its shift toward more profitable sales channels and diversified product offerings, the company is well-positioned for the future. Despite global challenges, Levi Strauss continues to demonstrate resilience, offering an example of how a legacy brand can thrive in an evolving retail landscape.
