Levi Strauss reported profits that exceeded Wall Street expectations due to focused price increases and a shift away from wholesalers. The company’s gross margin rose to 61.7%, higher than analyst predictions of 60.7%. Despite raising prices, demand remains strong, with most revenue growth not from price hikes.

Levi’s increase in prices has boosted margins, as the company discounts less and sells more through its own channels. The strong performance led Levi’s to raise its full-year outlook cautiously due to ongoing economic volatility. Earnings per share were 34 cents, beating the expected 31 cents, with revenue at $1.54 billion versus $1.50 billion expected.

Despite outperforming expectations, Levi’s stock fell more than 4% in after-hours trading. The company’s net income for the quarter was $218 million, or 55 cents per share, compared to $20.7 million, or 5 cents per share, the previous year. Sales surged to $1.54 billion, up 7% from the year before.

Levi’s now anticipates a 3% increase in full-year sales, up from earlier guidance of 1-2% growth. Adjusted earnings per share are expected to be between $1.27 and $1.32, surpassing previous estimates. The company predicts an operating margin between 11.4% and 11.6% and a gross margin increase of 1 percentage point.

Under CEO Michelle Gass, Levi’s has focused on expanding direct sales, diversifying beyond denim, and attracting more female customers. Direct-to-consumer revenue grew 11% in the quarter, driven by strong U.S. sales, while women’s clothing saw a 9% increase. The company’s efforts to sell more tops have also resonated with consumers, with that category up 9%.

Read more at CNBC: Levi Strauss (LEVI) Q3 2025 earnings