Levi’s lifts FY25 EPS outlook despite tariff hit as Q3 sales beat expectations

South Africa

The Top 40 index lost 0.79% yesterday to close at 103,073.5 points, while the All Share index shed 0.66% to reach 110,243.3 points. South Africa’s manufacturing output fell 1.5% year-on-year in August, deeper than July’s 1.3% decline and below the 0.1% growth analysts expected, signalling ongoing industrial weakness. SARB Governor Lesetja Kganyago confirmed ongoing discussions with National Treasury regarding a potential lowering of the inflation target. Treasury’s $500 million foreign currency financing initiative has received over 100 global proposals, exploring ESG-linked and structured instruments. A court ruling forced CRRC E-Loco to release locomotive spares to Transnet, supporting operational improvements and enhancing the state freight operator’s ability to address long-standing supply and contract disputes.

European Union

European equities declined, with the STOXX 600 down 0.4%, pressured by HSBC and Ferrari shares. HSBC’s $13.6 billion Hang Seng buyout and Ferrari’s underwhelming long-term guidance weighed on investor sentiment. France’s political instability, including Prime Minister Sebastien Lecornu’s resignation, heightened uncertainty over fiscal policy and budget approvals. ECB minutes signalled sufficient tools to manage eurozone inflation, while Portugal forecast modest growth and a small budget surplus for 2026. In Russia, gasoline prices rose 10.2% YTD, influencing inflation expectations and monetary policy, amid ongoing geopolitical tensions and energy market monitoring.

United States

U.S. equities slipped as investors consolidated ahead of Q3 earnings amid a prolonged government shutdown restricting economic data. The S&P 500 and Nasdaq pulled back slightly, while the Dow declined more sharply. Markets are concerned about potential overvaluation following a strong AI-driven tech rally, though the S&P 500 has risen nearly 90% from its October 2022 low. Fed commentary suggests additional rate cuts may be required to support a softening labour market. Analysts forecast Q3 year-on-year S&P 500 earnings growth of 8.8%, down from prior quarters, as investors await corporate results and policy clarity.

Asia

Asian equities opened cautiously, following Wall Street declines. Japan’s wholesale prices rose 2.7% YoY in September, above forecasts, maintaining cost pressures and constraining BOJ policy options. Food and beverage prices climbed 4.7% YoY, while agricultural prices moderated from August’s 41% surge. South Korean tech stocks surged: SK Hynix gained 10% and Samsung Electronics 6%, bolstered by AI-related partnerships and potential OpenAI investment in AMD. Persistent input cost-driven inflation remains a concern for regional central banks. Market focus is on how central banks balance inflation risks with growth amid ongoing geopolitical and macroeconomic uncertainty.

Currencies

The South African rand strengthened, supported by gold market gains and emerging market flows. The Japanese yen is on track for its largest weekly decline in a year amid fading expectations of BOJ rate hikes and political uncertainty. Euro weakness continued after French Prime Minister Lecornu’s resignation, reflecting investor concerns about political paralysis and delayed fiscal consolidation. Currency markets are increasingly sensitive to macro-political developments, with the rand and euro responding to domestic policy and geopolitical developments, while the yen’s decline highlights market concern over Japan’s monetary policy trajectory and its impact on export competitiveness.

Commodities

Gold fell 2%, dipping below $4,000/oz as profit-taking coincided with a stronger dollar and Israel-Hamas ceasefire news. Silver retreated from record highs for similar reasons. Oil prices were largely unchanged after recent declines, as easing geopolitical risk reduced the war premium. OPEC+ agreed to a modest November output increase, reducing oversupply concerns. Cocoa prices more than doubled since early 2024, with manufacturers passing costs to consumers and employing “shrinkflation,” raising chocolate prices ahead of Halloween. Investors remain cautious on commodities amid the U.S. government shutdown and global demand uncertainty.

Hammerson plc (HMN) +1.10%

Hammerson has successfully priced a €350 million 6.5-year bond at 110 basis points over euro mid-swaps with a 3.5% coupon, more than five times oversubscribed. The issue marks the first step in refinancing its €700 million 2027 sustainability-linked notes and follows rating upgrades from Fitch (to A-/BBB+) and a positive outlook from Moody’s (Baa2). FY25 earnings are now forecast at around £101 million. Strong operational momentum continues, with UK footfall up 6% and leasing deals signed 29% ahead of passing rent, underlining robust demand for Hammerson’s prime retail destinations.

Pick n Pay Stores Limited (PIK) +2.80%

Pick n Pay delivered a 4.9% rise in Group turnover for the 26 weeks to 31 August 2025, with like-for-like sales up 4.7%. Pick n Pay South Africa achieved 4.3% like-for-like growth, while Boxer remained the standout performer, up 13.9%. Online sales surged 34.4%, supported by Pick n Pay asap! and the Mr D platform. The Group expects its H1 FY26 headline loss to narrow by 40–50% to between R399m and R479m, reflecting stronger trading, improved funding costs, and Boxer’s continued outperformance amid subdued consumer conditions.

Equites Property Fund Limited (EQU) -1.23%

Equites delivered a solid interim performance for the six months to 31 August 2025, supported by strong operational execution and disciplined capital management. Net asset value per share rose 2.7% to R16.93, while distribution per share increased to 69.04 cents, in line with FY26 guidance of 5–7% growth. The Group maintained a healthy balance sheet with a 37.2% loan-to-value ratio and R3.4 billion in available liquidity. Portfolio rental growth reached 5.1%, vacancies remained low at 1.5%, and valuation gains of 4% underscored continued resilience in its logistics real estate portfolio.

Mahube Infrastructure Limited (MHB) 0.00%

Mahube Infrastructure has issued a further cautionary announcement, confirming that discussions between its Independent Board and the Offeror regarding a potential transaction remain ongoing. Shareholders will receive additional details once a firm intention to make an offer is submitted. The Independent Board has verified the accuracy and completeness of the information disclosed. Investors are advised to continue exercising caution when trading in Mahube shares until further updates on the proposed transaction are released.

Levi Strauss & Company (LEVI) -0.49%

Levi Strauss raised its FY25 adjusted EPS guidance to $1.27–$1.32, up from $1.25–$1.30, but fell short of consensus, reflecting costs from U.S. import tariffs. The company pre-positioned ~70% of holiday inventory, modestly raised prices, and expanded its direct-to-consumer offerings, though Q4 gross margins are expected to face a 130-basis-point hit. Third-quarter net revenue rose 7% to $1.54 billion, surpassing expectations, while adjusted EPS of $0.34 beat estimates of $0.31. Strong demand for wide-leg denim in Europe and the Americas offset tariff pressures and inventory increases.

PepsiCo Inc. (PEP) +4.23%

PepsiCo surpassed third-quarter revenue and profit expectations, driven by strong international demand for snacks and sodas and growth in its U.S. healthier drinks segment. Net revenue reached $23.94 billion versus the $23.83 billion estimate, with adjusted EPS beating by $0.03. The company named Steve Schmitt as CFO, succeeding Jamie Caulfield. Strategic initiatives include targeted acquisitions, supply-chain cost reductions, and product-line rationalisation, while tariffs weighed on core earnings. CEO Ramon Laguarta confirmed ongoing engagement with activist investor Elliott Management and reaffirmed annual organic revenue and adjusted profit targets, amid competitive pressures from Coca-Cola and global consumer headwinds.

Delta Air Lines Inc. (DAL) +4.29%

Delta reported stronger-than-expected Q3 results, with adjusted EPS of $1.71 versus the $1.53 estimate, driven by robust demand for premium travel and improved pricing power amid constrained U.S. seat capacity. Premium revenue, comprising 43% of passenger revenue, rose 9% year-on-year. The airline projects Q4 adjusted EPS of $1.60–$1.90, exceeding consensus, and revenue growth of 2–4% as corporate bookings and high-end travel remain strong. Delta plans to expand premium seating while moderating main cabin capacity, benefiting from structural industry changes, though potential impacts from the U.S. government shutdown remain uncertain.

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