Levi Strauss & Co. shares plummeted 5.74% in after-hours trading on Wednesday, following the release of the company's second-quarter financial results. The denim maker reported adjusted earnings per share of $0.28, surpassing the analyst consensus estimate of $0.24, while revenue of $1.56 billion also exceeded expectations of $1.52 billion.

Despite the earnings beat and an upward revision to its full-year guidance, investor sentiment turned negative as details emerged regarding significant cost pressures. The company disclosed it has paid approximately $80 million under International Emergency Economic Powers Act (IEEPA) tariffs and recognized restructuring charges of $13.5 million for the quarter ended May 31, 2026. These factors contributed to limited gross margin expansion of just 10 basis points to 62.7%, as tariff impacts and foreign exchange headwinds offset benefits from pricing actions and lower product costs.

Levi Strauss raised its fiscal 2026 outlook, now expecting reported net revenue growth of 7.0% to 7.5% and adjusted earnings per share of $1.46 to $1.52. However, the company noted that its guidance assumes U.S. tariffs on imports from China remain at 30%, indicating ongoing pressure from trade policies that continue to concern investors despite the company's operational performance and strategic shift toward direct-to-consumer sales.