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Levi Strauss (LEVI +11%) is trading sharply higher after reporting a robust EPS and revenue beat with its Q2 (May) results last night. Probably more impressive was the guidance with upside revs for Q3 (Aug) and a sharp increase in FY25 guidance. Specifically, LEVI upped its FY25 revenue guidance to +1-2% from -2% to -1%, which was well above analyst expectations. LEVI also upped its quarterly dividend slightly to $0.14/sh from $0.13/sh.

• LEVI saw broad-based strength across Direct-To-Consumer (owned stores and online) and Wholesale, international and domestic, women's and men's, tops and bottoms, units and AURs. LEVI was especially pleased to see DTC again lead its growth with comp sales up high-single digits. In addition, its Wholesale channel accelerated to 7+% growth, posting its third consecutive quarter of growth while also experiencing improving margins.
• The company hired a new CEO, Michelle Gass, who took the helm in January 2024. She deserves a lot of credit for turning the brand around. Specifically, LEVI has made significant strides in accelerating its shift toward becoming a DTC-first business across both brick & mortar and e-commerce. DTC now represents over half of sales and it's delivering consistent, healthy comps alongside improving profitability.
• Another change has been to expand beyond its core denim bottoms business. LEVI is becoming a full head-to-toe apparel lifestyle brand with growth in tops, dresses, outerwear, and non-denim bottoms. Importantly, LEVI has been expanding its assortment with greater discipline, rationalizing SKUs, introducing newness and focusing on full-price sell-through. Also, LEVI is selling its Dockers unit and has already exited its Denizen and footwear businesses to focus on its core Levi's brand.
• LEVI has also leaned heavily into marketing using celebrities and it is paying off. In Q2, LEVI launched the third chapter of its REIIMAGINE campaign with Beyoncé. This follows one-of-a-kind looks for her Cowboy Carter Tour. LEVI has been active since the start of the music festival season in 2025, from dressing Shaboozey at Stagecoach to hosting a roster of influencers at Coachella. More recently, it also became a leading sponsor for Primavera Sound in Barcelona, one of Europe's biggest festivals. LEVI has also outfitted influential pop icon Troye Sivan and offered an exclusive product collection.

Overall, this was a great quarter for LEVI. The outsized move appears related to the large EPS upside and especially the decision to boost FY25 revenue guidance. We think that really shows confidence by management in its near term outlook despite macro/tariff pressures. Also, LEVI's price points are on the higher end of the retail apparel spectrum, so it deserves credit for performing well despite lower consumer confidence. More generally, we have been following LEVI for years and have been asking when will results finally turn the corner? It has taken a long time, but we think its Q1 report and now this Q2 report is changing our view that its business is finally turning the corner as we like the changes being made.