During the October 7 episode of Mad Money, Jim Cramer examined Levi Strauss & Co.’s (NYSE:LEVI) newly released results, as he said that investors should look beyond the mixed headline numbers:
Tonight, the company reported a technically mixed quarter that I thought was pretty darn positive. Levi’s posted a small revenue miss, but some of that was driven by currency fluctuations. You can’t control those. Their organic growth was more in line with expectations. On the other hand, they delivered a large earnings per share beat, but part of that was driven by tariff refunds.
Previously, Cramer commented on the stock’s decline ahead of its earnings.
Levi Strauss (LEVI) ranks fifth on our list of 15 Best Apparel Stocks to Buy in 2026. See which four apparel stocks ranked ahead of LEVI.
Management Sees Direct Sales Picking Up
Levi Strauss & Co. reported fiscal third-quarter revenue of approximately $1.6 billion, up 4% as reported and 5% organically. Adjusted diluted earnings per share increased to $0.48 from $0.34, while diluted earnings from continuing operations rose to $0.43 from $0.31. Management now expects approximately 6% organic revenue growth for the full year, compared with its previous range of 5.5% – 6%.
The more encouraging development was management’s assessment. CEO Michelle Gass acknowledged that direct-to-consumer sales missed internal expectations but said corrective actions were producing better trends heading into the holidays. The company expects mid-single-digit growth in that business during the fourth quarter and announced plans for a $100 million accelerated share repurchase. That improvement is what interested Cramer, as he said:
I care about what’s going to happen in the future. And honestly, with what already happened, I think the people who decide, you know what, I don’t like what happened in the first two months of DTC should look at what happened with the stock, which completely reflected that, but does not reflect the comeback, which is what I care about.
When the company reported its previous earnings, Cramer had quite positive things to say about it.
Tariff Refunds Explain Much of the Earnings Jump
The quarter’s profit growth needs qualification. Tariff refunds contributed $0.11 to adjusted EPS after related reinvestment. Subtracting that benefit from reported adjusted EPS leaves approximately $0.37, compared with $0.34 a year earlier. Direct-to-consumer comparable sales grew just 0.4%. Meanwhile, reported full-year revenue growth is now expected at approximately 7%, the bottom of the previous 7% – 7.5% range, highlighting foreign-exchange effects. These figures leave the holiday-season recovery important to management’s outlook.
The stock’s valuation is modest, although it is not the cheapest apparel name. Data show Levi Strauss trading at approximately 12.1x forward earnings, compared with 7.3x for PVH. Nevertheless, you can find out more about whether the latter is a deep value bargain or a value trap. That premium makes continued fundamental growth more relevant than the refund-assisted earnings increase alone.
Hedge Fund Participation Increased
Insider Monkey’s database showed 40 hedge funds holding Levi Strauss & Co. in Q2, up from 35 in Q1. Increasing its stake by 36% to 2.35 million shares, Citadel Investment Group took the top spot among the 1000+ hedge fund holders tracked by Insider Monkey in Q2. Short interest stood at 8.09% of the public float. Ownership broadened, although the short position suggests that skepticism remains.
As per Cramer, the stock has already absorbed the disappointing direct-sales performance. Management’s fourth-quarter comments give that view some support. The next report will show whether the recent improvement lasts, and whether Levi’s can produce stronger results without another large refund benefit.
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