Levi Strauss & Co (LEVI) shares plummeted 5.13% in post-market trading on Wednesday, despite the company reporting better-than-expected second-quarter results and raising its full-year outlook.

The denim maker posted adjusted earnings of $0.28 per share, beating the $0.24 consensus estimate, while revenue of $1.56 billion also exceeded expectations of $1.52 billion. The company raised its fiscal 2026 revenue growth forecast to 7.0%-7.5% from 5.5%-6.5% previously and adjusted EPS guidance to $1.46-$1.52 from $1.42-$1.48.

However, investor sentiment turned negative as the midpoint of the new earnings guidance fell below analyst expectations of $1.51. Additionally, the company disclosed significant cost pressures, including approximately $80 million in IEEPA tariff payments and $13.5 million in restructuring charges for the quarter. These factors, along with foreign exchange headwinds, limited gross margin expansion to just 10 basis points, overshadowing the earnings beat and guidance increase.