Levi Strauss & Co. Q2 2025: Diverging Narratives on Tariffs, Inventory, and Growth Projections

Tariff assumptions and pricing strategy, inventory management and wholesale orders, expectations for growth and market share, wholesale revenue growth expectations, and gross margin expansion expectations are the key contradictions discussed in Levi Strauss & Co.'s latest 2025Q2 earnings call.



Revenue Growth and Strategic Pivots:
- Levi Strauss & Co. reported a 9% increase in net revenue for Q2, marking the third consecutive quarter of high single-digit organic growth.
- Growth was driven by strategic priorities such as transitioning to a DTC-first model, expanding into a full lifestyle brand, and focusing on key profit centers like women's and tops.

Gross Margin Expansion:
- The company achieved a record gross margin of 62.6%, representing a 140 basis points increase year-over-year.
- Improvements were due to lower product costs, favorable channel mix, and enhanced life cycle management, allowing for higher full-price sales and reduced promotions.

Direct-to-Consumer Performance:
- Levi's global direct-to-consumer performance grew 10%, with consistent positive comps across channels, contributing to overall high single-digit revenue growth.
- Growth in DTC was supported by increased store traffic, higher conversion rates, and improving margins, reflecting the transition to a more profitable channel.

International and Regional Performance:
- The international business increased by 10%, led by 15% growth in Europe, which is now the second largest geographic segment.
- Strong performance was attributed to brand relevance, strategic investments in key markets, and a broadened product assortment, particularly in women's and lifestyle categories.