Levi Strauss raises sales guidance, says it will absorb some tariff costs for now

Levi Strauss anticipates its sales and fits will grow more than it had expected this year -- as long as tariffs don't get any higher

CEO Michelle Gass told CNBC the company is doing what it can to absorb costs to avoid steep price increases

In this articleLEVI your favorite stocksCREATE FREE ACCOUNTWorkers perfom their duties at the Nien Hsing Textile factory, a global manufacturer of Levi's jeans, on the outskirts of Maseru, the capital of Lesotho, a small Southern African kingdom that U

Siphiwe Sibeko | ReutersLevi Strauss raised its full-year guidance Thursday and said it's working to absorb some of the costs it's facing from higher tariffs, but that could change as President Donald Trump's trade policy evolves

The denim maker doesn't disclose its key manufacturing hubs, but much of its supply comes from Southeast Asia

Many countries in the region have been targeted by Trump's so-called recical tariff plan

Levi's is currently expecting its full-year adjusted earnings to be between $1. 30 per, up from a prior forecast of between $1. 25 and better than the $1. 23 analysts had expected, according to LSEG

In an interview with CNBC, Levi's finance chief Harmit Singh said most of Levi's sourcing is from countries Pakistan, Bangladesh and Indonesia

For now, Levi's said it's planning to absorb what it can

As policy currently stands, it anticipates tariffs will only impact the by $25 million to $30 million for the rest of the year, or 2 to 3 cents on earnings per. "We are doing our part

We are absorbing some of the costs

What helps is that our is so strong," said CEO Michelle Gass. "We have been pulling back on motions anyway, that's leading to more full-price selling, and some of our new innovation, our new fits, we're pricing at a premium, and they're buying

So all of those things help us navigate this time of having the tariff headwind. " Beyond tariffs, Levi's dered fiscal second quarter earnings that beat expectations on the top and bottom lines

The company's reported net income for the three-month period that June 1 was $67 million, or 17 cents per, compared with $18 million, or 4 cents per, a year earlier

Excluding one-time charges related to restructuring and impairment expenses, among other costs, Levi posted earnings per of 22 cents

That range is well ahead of expectations

Analysts had expected revenue to decline by 5. 2%, according to LSEG

Levi's did cut its gross margin guidance by 0. 2 percentage points, and now expects gross margin to grow by 0. 8 percentage points because of the impact tariffs are having on fits

Since Gass took over as the retailer's CEO, she's worked to cut off underperforming parts of the

In May, the company announced it would sell its Dockers brand to Authentic Brands Group

She's also worked to drive direct sales to consumers, focused on e-commerce and stores rather than wholesale partners Macy's and Kohl's, because it comes with higher margins and gives the company better insights into its customers

Levi's, which has long catered to a male shopper, is also trying to win over female consumers and expand from a denim company to one known for a wide range of apparel

Levi's women's category is the retailer's "highest gross margin," said Singh. "The consumer is definitely responding and voting for this direction

So as we look ahead, we're confident," Gass told CNBC. "We know that there's uncertainty in the world right now, but the consumer is ving quite resilient for Levi's. " At the core of Levi's strategy is ensuring it's still relevant with consumers

A recent partnership with Beyonce has helped the company stay top of mind with shoppers, especially as the singer continues her Cowboy Carter tour

In May, the company launched a limited-edition drop of Beyonce x Levi's T-shirts, the first duct to come from the collaboration

It also started a partnership with Nike, which went on Thursday on Levi's website and some of its stores

The collection includes a denim-inspired take on the Air Max 95.