LEVI STRAUSS & CO. REPORTS THIRD-QUARTER RESULTS
LEVI STRAUSS & CO (LEVI) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE Investor Contact: Aida Orphan Media Contact: Mark Cazares Levi Strauss & Co. Levi Strauss & Co. (415) 501-6194 (415) 501-7777 Investor-Relations@levi.com NewsMediaRequests@levi.com LEVI STRAUSS & CO. REPORTS THIRD-QUARTER RESULTS REPORTED NET RE
How this was made
The 30-second read
Why it matters
The raised full‑year margin and EPS outlook provides a fresh catalyst for the stock, likely prompting buying interest.
Market read
The earnings beat and raised guidance create a positive short‑term catalyst for LEVI, with limited broader market effects.
What to watch
Potential headwinds in the U.S. DTC segment and foreign exchange volatility could temper upside.
REPORTED NET REVENUES UP 4%; ORGANIC NET REVENUES UP 5% OPERATING MARGIN OF 13.8%; ADJ EBIT MARGIN OF 15.5% CONTINUING OPERATIONS DILUTED EPS OF $0.43; ADJ DILUTED EPS OF $0.48 RAISES FULL YEAR 2026 MARGIN AND EPS OUTLOOK
Third-quarter reported and organic revenue growth was accompanied by substantial gross-margin and adjusted EBIT-margin expansion, higher continuing-operations earnings, broad geographic growth and raised full-year margin and adjusted diluted EPS guidance. DTC growth was comparatively modest and fell short of internal expectations.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net revenuesGAAP | $1.61B | – | 4.3 % |
| Q3 2026 organic net revenuesnon-GAAP | $1.61B | – | 4.5 % |
| Q3 2026 cost of goods soldGAAP | $543.9M | – | – |
| Q3 2026 gross profitGAAP | $1.07B | – | – |
| Q3 2026 gross marginGAAP | 66.2% | – | expanded 450 basis points |
| Q3 2026 selling, general and administrative expensesGAAP | $835.9M | – | – |
| Q3 2026 adjusted SG&Anon-GAAP | $817.1M | – | 6.2% |
| Q3 2026 SG&A marginGAAP | 51.9 % | – | – |
| Q3 2026 adjusted SG&A marginnon-GAAP | 50.8 % | – | – |
| Q3 2026 restructuring charges, netGAAP | $7.6M | – | – |
| Q3 2026 operating incomeGAAP | $222.3M | – | – |
| Q3 2026 operating marginGAAP | 13.8% | – | – |
| Q3 2026 adjusted EBITnon-GAAP | $248.7M | – | 36.4 % |
| Q3 2026 adjusted EBIT marginnon-GAAP | 15.5 % | – | 31.4 % |
| Q3 2026 adjusted EBITDAnon-GAAP | $303.4M | – | – |
| Q3 2026 effective income tax rateGAAP | 23.4% | – | – |
| Q3 2026 net income from continuing operationsGAAP | $168.6M | – | 39% |
| Q3 2026 adjusted net incomenon-GAAP | $188.9M | – | 39.2 % |
| Q3 2026 net incomeGAAP | $168.6M | – | – |
| Q3 2026 diluted earnings per share from continuing operationsGAAP | $0.43 | – | 12¢ |
| Q3 2026 adjusted diluted earnings per sharenon-GAAP | $0.48 | – | 14¢ |
| Q3 2026 net cash provided by operating activitiesGAAP | $102.9M | – | – |
| Q3 2026 adjusted free cash flownon-GAAP | $44.3M | – | – |
| Q3 2026 DTC comparable sales growthother | 0.4 % | – | – |
| Nine months 2026 net revenuesGAAP | $4.91B | – | 8.8 % |
| Nine months 2026 adjusted EBITnon-GAAP | $607.7M | – | 20.2 % |
| Nine months 2026 net income from continuing operationsGAAP | $440.5M | – | 29% |
| Nine months 2026 adjusted net incomenon-GAAP | $465.4M | – | 24.4 % |
| Nine months 2026 diluted earnings per share from continuing operationsGAAP | $1.12 | – | 26¢ |
| Nine months 2026 adjusted diluted earnings per sharenon-GAAP | $1.19 | – | 25¢ |
| Nine months 2026 net cash provided by operating activitiesGAAP | $585.2M | – | – |
| Nine months 2026 adjusted free cash flownon-GAAP | $427.3M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AmericasOrganic net revenues increased 2.5 %. | $838.8M | – | 4.0 % |
| EuropeOrganic net revenues increased 4.7 %. | $442.1M | – | 3.7 % |
| AsiaOrganic net revenues increased 9.6 %. | $292.8M | – | 5.4 % |
| Beyond Yoga®Reported and organic net revenues increased 9.1 %. | $36M | – | 9.1 % |
| WholesaleOrganic net revenues increased 6.3 %, driven by growth in all segments, with particularly strong performance in Europe and Asia. | $882.3M | – | 6.0 % |
| DTCE-commerce net revenues grew 10% on a reported and organic basis. DTC comprised 45% of total net revenues. | $727.4M | – | 2.3 % |
year ending November 29, 2026 outlook
- RevenueReported net revenues growth approximately 7.0%, due to the impact of foreign exchange; organic net revenues growth approximately 6.0%
- Gross marginRaised to up 130 basis points to prior year
- Tax rateApproximately 23%, 2 points higher than prior year
- NoteAdjusted EBIT margin expanding to approximately 12.1%, up 70 basis points to prior year
- NoteAdjusted diluted EPS raised to $1.54 to $1.56
- NoteAdjusted diluted EPS guidance includes an approximate $0.04 headwind from a higher tax rate
- NoteGuidance includes the impact of IEEPA tariff refunds, of which the company is redeploying approximately $60 million for the full year, including approximately $35 million for the fourth quarter
- NoteAssumes current tariff rates remain in effect for the remainder of the year
- NoteAssumes no significant worsening of macro-economic pressures on the consumer, inflationary pressures, supply chain disruptions, potential tariffs or currency fluctuations
Capital returns
- $61.6 million returned as dividends to shareholders in the third quarter, an 11% increase over prior year
- Dividend of $0.16 per share in the third quarter
- $200 million accelerated share repurchase program launched in the first quarter of 2026 settled in the third quarter
- Approximately 1.6 million shares were delivered and retired in the third quarter, for a total of 9.4 million shares over the entirety of the ASR program
- $240 million remaining under the current share repurchase authorization as of August 30, 2026
- Company intends to enter into an ASR agreement to repurchase $100 million of its Class A common stock
- Declared dividend of $0.16 per share, a 14% increase over prior year, totaling approximately $61 million, payable in cash on November 4, 2026 to holders of record on October 21, 2026
What drove it
- International and wholesale businesses delivered strong growth, according to management.
- Wholesale net revenues increased 6% on a reported and organic basis, driven by growth in all segments, with particularly strong performance in Europe and Asia.
- Net revenues from e-commerce grew 10% on a reported and organic basis.
- Gross-margin expansion reflected IEEPA tariff refunds, which contributed 490 basis points of gross-margin expansion, partially offset by approximately 120 basis points redeployed to support the business.
- The company redeployed IEEPA tariff refunds into additional promotion and marketing expenditures, producing $25 million of additional expense in the quarter, including $19 million in gross margin and $6 million in SG&A.
- The remaining adjusted SG&A increase was driven primarily by selling and distribution expenses.
Concerns
- Management said the DTC business fell short of internal expectations.
- U.S. reported net revenues decreased 1% and U.S. DTC reported net revenues decreased 1%.
- DTC comparable sales growth was 0.4 %, compared with high-single digits for the three-month period ended August 31, 2025.
- The outlook assumes no significant worsening of macro-economic pressures on the consumer, inflationary pressures, supply chain disruptions, potential tariffs or currency fluctuations.
- The effective income tax rate was 23.4%, compared to 21.9% in Q3 2025.
What to watch
- Whether DTC delivers management's expectation for mid-single-digit growth in the fourth quarter.
- U.S. and Americas DTC trends following reported U.S. DTC growth of negative 1% and Americas organic DTC growth that was flat.
- The scale and timing of tariff-refund benefits and the planned redeployment of approximately $35 million during the fourth quarter.
- Delivery against full-year guidance for approximately 7.0% reported revenue growth, approximately 6.0% organic revenue growth, approximately 12.1% adjusted EBIT margin and $1.54 to $1.56 of adjusted diluted EPS.
- Execution of the intended $100 million accelerated share repurchase agreement.
Balance sheet and cash flow
- Cash and cash equivalents were $641.4 million as of August 30, 2026, compared to $757.9 million as of November 30, 2025
- Short-term investments in marketable securities were $137.9 million as of August 30, 2026
- Total liquidity was approximately $1.5 billion as of August 30, 2026
- Inventories were $1,253.6 million as of August 30, 2026, compared to $1,237.7 million as of November 30, 2025
- Total inventories decreased 3% on a dollar basis compared to Q3 2025
- Long-term debt was $1,043.6 million as of August 30, 2026
- Nine-month net cash provided by operating activities was $585.2 million, compared to $262.8 million
- Nine-month purchases of property, plant and equipment were $(157.9) million, compared to $(170.3) million
- Nine-month accelerated share repurchase, including excise tax, was $(201.0) million
- Nine-month dividends to stockholders were $(169.3) million
Analysis
Levi Strauss delivered $1,609.7 million of third-quarter net revenues, up 4.3 %, while organic net revenues increased 4.5 %. Growth was broad across reported geographic segments, including 4.0 % in the Americas, 3.7 % in Europe, 5.4 % in Asia and 9.1 % at Beyond Yoga®. Wholesale revenue increased 6.0 %, while DTC revenue increased 2.3 % and DTC comparable sales growth was 0.4 %. Management identified international and wholesale strength, e-commerce growth and lifestyle-category momentum, but stated that DTC fell short of internal expectations.
Profitability improved sharply. Gross margin was 66.2%, compared with 61.7%, and operating margin was 13.8%, compared with 10.8%. Adjusted EBIT rose to $248.7 million from $182.3 million and adjusted EBIT margin reached 15.5 %, compared with 11.8 %. IEEPA tariff refunds contributed 490 basis points of gross-margin expansion and 490 basis points of margin expansion, while the company redeployed a portion of the benefit into promotion and marketing. The tariff refund benefit net of redeployment was 370 basis points for gross margin, 330 basis points for margin and $0.11 of EPS.
Continuing-operations net income increased to $168.6 million from $122.0 million, and adjusted net income increased to $188.9 million from $135.7 million. Diluted EPS from continuing operations was $0.43, compared with $0.31, while adjusted diluted EPS was $0.48, compared with $0.34. GAAP SG&A increased to $835.9 million from $775.6 million, and adjusted SG&A increased 6.2% to $817.1 million, with the remaining increase primarily driven by selling and distribution expenses. The effective income tax rate was 23.4%, compared with 21.9%.
Cash generation improved over both the quarter and nine-month period. Third-quarter adjusted free cash flow was $44.3 million, compared with $(39.4) million, and nine-month adjusted free cash flow was $427.3 million, compared with $92.5 million. Cash and cash equivalents were $641.4 million, total liquidity was approximately $1.5 billion and long-term debt was $1,043.6 million as of August 30, 2026. The company returned $61.6 million through third-quarter dividends, completed its $200 million ASR program, and intends to enter into a new $100 million ASR agreement.
The company raised its full-year gross-margin, adjusted EBIT-margin and adjusted diluted EPS outlook. Full-year reported net revenue growth is now expected to be approximately 7.0%, organic revenue growth approximately 6.0%, adjusted EBIT margin approximately 12.1% and adjusted diluted EPS $1.54 to $1.56. Guidance incorporates IEEPA tariff refunds and approximately $60 million of full-year redeployment, including approximately $35 million in the fourth quarter. The central operating test is the expected acceleration to mid-single-digit DTC growth in the fourth quarter, particularly in the U.S., against a backdrop of stated macroeconomic, inflation, supply-chain, tariff and currency risks.
Management, verbatim
We saw strong growth in our international and wholesale businesses, and continued momentum across our lifestyle categories. While our direct-to-consumer business fell short of our internal expectations, we moved quickly to address the shortfall and are encouraged by the strength we are seeing heading into the holiday season, including in the U.S.
Michelle Gass, President and CEO of Levi Strauss & Co.
We made the decision to redeploy a majority of our tariff refund benefit back into the business during Q3 and Q4 to support future growth. Reflecting confidence in our outlook, we are raising our full-year profit guidance and plan to initiate a $100 million accelerated share repurchase program.
Harmit Singh, Chief Financial and Growth Officer of Levi Strauss & Co.
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported metrics
- Full-year fiscal 2026 operating-expense guidance
- GAAP reconciliation for forward-looking adjusted EBIT margin and adjusted diluted EPS guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Levi Strauss & Co. filed a Form 8‑K reporting its third‑quarter 2026 financial results and updated guidance.
Ticker impact
Levi Strauss & Co. reported Q3 results with revenue up 4% and raised full-year margin and EPS outlook.
upward pressure as investors price in higher margins and EPS
The company disclosed higher operating margin, adjusted EBIT margin and explicitly raised its FY2026 margin and EPS outlook, a fresh primary disclosure that can move the share price.
Market effects
Apparel and consumer discretionary sector may see modest uplift from a major brand's improved outlook.
U.S. consumer discretionary sentiment could be slightly boosted.
Limited global impact; primarily relevant to U.S. investors.
Counterpoint
If the raised guidance is already priced in, the stock could face a short‑term pullback.
Key entities
- companyLevi Strauss & Co.
U.S. apparel retailer listed on NYSE under ticker LEVI.
