Levi Strauss & Stock Earnings Reports

Levi Strauss reported a strong Q2 FY26: organic net revenues up 6% (reported +8%), driven by international strength (Asia +12%) and the U.S. (6%). Direct-to-consumer (DTC) remains the growth engine (DTC +8%, comps +6%) and comprised 51% of revenue; e-commerce grew 17%. Product expansion beyond denim bottoms (tops, shorts, linen, warm-weather assortments) contributed roughly one-third of revenue growth, with women's up 11% and premium BlueTab showing early traction. Gross margin expanded 10 bps to 62.7% despite tariff and FX headwinds; adjusted EBIT margin expanded 70 bps to 9% and adjusted diluted EPS was $0.28 (+27% YoY). Inventory declined 7% and adjusted free cash flow rose ~80% to $231M. Management raised full-year guidance: organic revenue now +5.5% to +6%, reported revenue +7% to +7.5%, adjusted EBIT margin targeted at 12% and adjusted diluted EPS to $1.46–$1.52. They assume continued tariff headwinds in guidance and have not assumed potential tariff refund benefits (~$80M). Strategic initiatives progressing: European distribution remap complete, U.S. DC transition ongoing (Hebron consolidation), global ERP migration underway (completion by mid-2027) to unlock data/AI capability and operational scale. Capital allocation remains disciplined: returning 55–65% of free cash flow to shareholders, increasing Q3 dividend to $0.16/share, and continuing opportunistic buybacks. Management emphasized resilience in the consumer, broad-based growth across channels/categories/regions, continued margin expansion (noting further leverage expected into Q4), and a long-term objective of $10B revenue with 15% operating margin.