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    LEVI
    Earnings call· Feb 2026(Q1 FY26)

    LEVI STRAUSS & Q1 FY26 earnings call LEVI

    Apr 7, 2026 Source

    Executive summary

    Levi Strauss & Co. Q1 FY26 — Strong Start Exceeding Expectations with Raised Full-Year Guidance

    Levi Strauss & Co. delivered a strong Q1 FY26, exceeding top and bottom-line expectations across all regions and channels, driven by strategic execution and a DTC-first approach. The company raised its full-year guidance, reflecting continued momentum, despite acknowledging a prudent view on the macro environment and the upcoming CFO transition.

    Highlights

    5

    • Organic net revenue grew 9%, exceeding expectations, with reported revenue up 14%.

    • DTC channel delivered 10% growth with comparable sales up 7%, marking 16th consecutive quarter of positive comps.

    • Double-digit top-line growth in Europe (10%) and Asia (12%), with Americas up 7%.

    • Adjusted diluted EPS increased 11% to $0.42, ahead of expectations.

    • Women's business grew 13% and tops business grew 13%, expanding the addressable market.

    Concerns

    4

    • Gross margin contracted 20 basis points year-over-year, primarily due to tariffs.

    • Adjusted SG&A grew 16%, driven by higher A&P, higher sales volume, and foreign exchange.

    • Operating loss in Beyond Yoga narrowed but the business is still operating at a loss.

    • Q2 revenue growth impacted by approximately $30 million timing shift from Europe distribution center ramp-up.

    Guidance & targets

    19
    CategoryTargetConfidence
    Full-year reported net revenue growth
    up 5.5% to 6.5%
    high materiality
    High
    Full-year organic net revenue growth
    up 4.5% to 5.5%
    high materiality
    High
    Full-year global wholesale growth
    up low single digits
    medium materiality
    High
    Full-year gross margin
    flat to slightly up
    high materiality
    High
    Full-year adjusted EBIT margin
    approximately 12%
    high materiality
    High
    Full-year adjusted diluted EPS
    $1.42 to $1.48
    high materiality
    High
    Q2 reported revenues growth
    up 4% to 5%
    medium materiality
    High
    Q2 organic revenues growth
    up 3% to 4%
    medium materiality
    High
    Q2 gross margin
    slightly down
    medium materiality
    Medium
    Q2 adjusted EBIT margin
    8% to 9%
    medium materiality
    High
    Q2 adjusted diluted EPS
    $0.22 to $0.24
    medium materiality
    High
    H1 EBIT margins
    10% to 11%
    medium materiality
    High
    H2 EBIT margins
    13% to 14%
    medium materiality
    High
    Europe H1 growth
    mid-single digit
    medium materiality
    High
    Europe Fall and Winter prebook
    up high single digits
    low materiality
    High
    A&P as percentage of sales
    approximately flat year-over-year at around 7%
    low materiality
    High
    U.S. tariffs on imports from China
    30% rate
    high materiality
    High
    U.S. tariffs on imports from rest of world
    20% rate
    high materiality
    High
    Potential benefit if 10% tariffs stay
    $35 million to COGS and $0.07 to EPS
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Americas
    Driven by strength across DTC and wholesale channels. U.S. wholesale was up even with rationalization actions. LatAm acceleration driven by double-digit growth across every market, including Mexico. Operating margin contracted due to timing of A&P and impact of tariffs.
    U.S. growth: 4%LatAm growth: 14%
    		—7%—contracted 260 bps
    Europe
    Solid demand and strength across markets and channels. Consumers responding to elevated denim lifestyle assortment. Italy revenues nearly doubled since 2021, strengthening #1 share in denim bottoms. Operating margin expanded driven by gross margin expansion. Q1 revenue growth benefited by approximately $30 million due to distribution center timing shift, which will have an offsetting impact in Q2.
    H1 growth expectation: mid-single digitFall and Winter prebook: up high single digits
    		—10%—expanded 50 bps
    Asia
    Fueled by growth across both channels, led by DTC. Key markets like India, Japan, Korea, and Turkey delivered strong results. China was positive, reflecting early progress under new leadership. Operating margin expansion driven by gross margin expansion and SG&A leverage. Middle East is mostly operated as a distributor model.
    DTC growth: 16%Middle East as % of total company revenues: ~0.5%
    		—12%—expanded 150 bps
    Signature
    Reflecting impressive performance in women's. Revitalized through product and brand reset, expanding into lifestyle categories, translating into share gains within key wholesale accounts.
    		—16%——
    Beyond Yoga
    DTC continuing to show solid momentum. Expands addressable market into premium activewear. Recently launched Seek Beyond marketing campaign and broader product offerings gaining traction. Operating loss narrowed, reinforcing path toward profitability.
    		—23%—operating loss narrowed

    Operational metrics

    29
    Organic net revenue growth
    9%YoY
    Q1 FY26

    Exceeded expectations across top and bottom line.

    Reported net revenue growth
    14%YoY
    Q1 FY26

    Exceeded expectations across top and bottom line.

    DTC channel growth
    10%YoY
    Q1 FY26

    Global direct-to-consumer business delivered double-digit growth.

    Comparable sales growth (DTC)
    7%YoY
    Q1 FY26

    Marked 16th consecutive quarter of positive comps, on top of high single-digit growth last year.

    Wholesale channel growth
    8%YoY
    Q1 FY26

    Results were better than expected, driven by strength across segments.

    Women's growth
    13%YoY
    Q1 FY26

    Continued to accelerate, accounting for approximately 55% of total growth.

    Men's growth
    7%YoY
    Q1 FY26

    Core business remains strong.

    Tops growth
    13%YoY
    Q1 FY26

    Contributed roughly 1/3 of total growth in the quarter.

    Bottoms growth
    7%YoY
    Q1 FY26

    Fueled by innovation and execution.

    517s growth
    25%YoY
    Q1 FY26

    Iconic style seeing increased popularity.

    Blue Tab growth
    40%YoY
    Q1 FY26

    Premium expression of the Levi's brand delivered robust growth.

    Blue Tab market share
    1%
    Current

    Represents a sizable long-term opportunity for the Levi's brand.

    New US e-commerce orders from Gen Z and millennials
    70%
    Q1 FY26

    Reflects ability to connect with younger consumers, driven by product newness, lifestyle-led storytelling, and dynamic digital experience.

    Loyalty program members
    46 millionup 17% YoY
    Q1 FY26

    Loyalty program continues to be a powerful driver of consumer engagement.

    Loyalty member spend
    40% more
    Q1 FY26

    Loyalty members spend about 40% more with higher transaction values and purchase frequency than nonmembers.

    Italy revenue growth
    nearly doubled
    Since 2021

    Italy plays a unique role as a premium halo for Levi's across Europe, shaping brand perception.

    Adjusted EBIT margin
    12.5%
    Q1 FY26

    Exceeded expectations. Excluding 160-basis points impact of A&P, adjusted EBIT margin would be 14.1%.

    Gross margin
    61.9%contracting 20 bps YoY
    Q1 FY26

    Slightly better than external expectations, primarily due to tariffs. Partially offset by pricing actions and lower promotional activity.

    Adjusted SG&A growth
    16%YoY
    Q1 FY26

    Excluding 160-basis points impact of A&P, delivered 90 basis points of leverage across the balance of the business.

    A&P as percentage of sales
    7%approximately flat YoY
    FY26

    Expected for the full year. Timing of A&P was earlier in the year to support global campaign launch.

    Inventory dollars
    4%up
    Q1 FY26

    Comfortable with the quantity and quality of inventory as entering the spring season.

    Shareholder returns
    $214 millionup 163% YoY
    Q1 FY26

    Total for the quarter, including share repurchases.

    Dividend per share
    $0.14up 8% YoY
    Q2

    Declared for Q2.

    Asia as percentage of total company revenues
    20%
    Current

    Underpenetrated market, representing about 20% of the business when half the world's population is there.

    Middle East as percentage of total company revenues
    0.5%
    Current

    Part of Asia segment, mostly operated as a distributor model.

    Europe distribution center timing shift revenue impact
    $30 millionbenefit
    Q1 FY26

    Shipments moved from Q1 to Q2 due to ramp-up of distribution center in Europe last year. This will have an offsetting impact in Q2.

    Product commonality in DTC
    nearly 50%
    Current

    Driven greater productivity through SKU reduction and enabled focus on fewer, bigger product stories.

    Go-to-market calendar
    13 monthsfrom 16 months
    Current

    Driving to a tighter go-to-market calendar to improve product costs.

    US store openings
    10-12 storesfor next couple of years
    per year

    Plan to double the current count of full-price stores in the U.S.

    Industry KPIs

    7
    MetricValueDetails
    Inventory positionup 4%%
    Revenue by channelDTC up 10%, Wholesale up 8%%
    Operating margin sg a12.5%%
    Store fleet door investment10-12 storesstores
    Share buyback capital return$214 millionUSD
    Tariff cost exposure recoverycontracted 20 bpsbps
    Franchise product cycle performanceWomen's up 13%, Men's up 7%, Tops up 13%, Bottoms up 7%%

    Product announcements

    6
    ProductTypeDetails
    Behind Every Originallaunch
    Rose (BLACKPINK) Partnershipexpansion
    Nike Apparel Capsule and Denim Nike Air Jordan 3slaunch
    Grunge Prep collectionlaunch
    Spring and Summer global product assortmentroadmap
    Seek Beyond marketing campaignlaunch

    Deals & partnerships

    1
    DockersSuccessful closing of the Dockers transaction.

    The successful closing of the Dockers transaction was an important step forward in Q1.

    Risks & headwinds

    3
    Tariff ImpactQ1 FY26, full year FY26

    Gross margin contracted 20 basis points YoY in Q1. Full-year gross margin expected flat to slightly up, implying full offset of 19% tariff increase.

    Mitigation: Pricing actions, lower promotional activity, locking in ocean freight rates and cotton at favorable levels.

    Macro Environment UncertaintyFull year FY26

    Not quantified, but leads to 'prudent view' in guidance.

    Mitigation: Focus on strategic execution, product innovation, and value proposition; maintaining disciplined, balanced approach to guidance.

    CFO TransitionPlanned transition, successor to be appointed.

    Not quantified.

    Mitigation: Harmit Singh will remain CFO until successor is appointed and then serve as an adviser to ensure continuity.

    What to watch in Q2 FY26

    5

    Europe Q2 Organic Revenue Growth

    Q2 FY26
    CurrentQ1 Europe organic revenue up 10%
    TargetMid-single digit growth for H1 FY26 (implies Q2 will be lower due to $30M timing shift)

    Why it matters

    To assess the impact of the $30M timing shift from the Europe distribution center ramp-up on Q2 revenue and confirm underlying demand trends remain consistent.

    Given the distribution transition we are lapping in Q1 and Q2 of '25, it is best to look at Europe on an H1 basis. We expect Europe to grow mid-single digit in the first half of the year, consistent with our guidance for the segment.

    Q&A highlights

    5

    What's driving the business momentum and how confident are you in sustaining it given the uncertain macro backdrop? For Harmit, can you unpack the 16% SG&A growth and the outlook for distribution expenses?

    Michelle attributed momentum to strategic execution (DTC-first, denim lifestyle, product innovation) and strong consumer response, expressing confidence despite macro uncertainty. Harmit detailed SG&A growth drivers (A&P timing, FX, volume, inflation, new store openings) and committed to improving SG&A as a percentage of revenue, highlighting flow-through focus and DC transition progress.

    “We are very cognizant of the environment around us. But our consumer is responding to innovation, newness and Levi's as a great value.”

    asked by Laurent Vasilescu · answered by Michelle Gass

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Momentum & DTC-First Approach

    Levi Strauss & Co.'s strategic choices to narrow its focus and maximize the Levi's brand potential are driving consistent and faster growth, expanding its addressable market, and improving profitability. The company is evolving into a DTC-first denim lifestyle company, which has resulted in 16 consecutive quarters of positive comparable sales growth in the DTC channel. E-commerce grew 17% in Q1, attracting a younger demographic, with 70% of new U.S. e-commerce orders coming from Gen Z and millennials.

    02

    Brand-Led Growth & Cultural Relevance

    The Levi's brand achieved 9% organic growth in Q1, fueled by strong cultural activations. The new global campaign, 'Behind Every Original,' launched during the Super Bowl, generated over 1.4 billion media impressions in February alone, driving significant awareness and brand equity. Collaborations with Nike and organic celebrity endorsements, such as Harry Styles wearing vintage 501s, underscore the brand's authentic connection to culture and its ability to resonate with consumers.

    03

    Product Innovation & Market Expansion

    Product innovation is a key growth driver, with the bottoms business up 7% due to modern interpretations of iconic styles and successful launches of fashion-forward loose and baggy fits. The expansion into categories beyond denim bottoms, including tops (up 13%) and dresses, contributed roughly a quarter of top-line growth and significantly expanded the total addressable market. The premium Blue Tab expression delivered robust growth of 40% in Q1, representing a substantial long-term opportunity.

    04

    International Performance & Portfolio Power

    International markets demonstrated strong momentum, with Europe growing 10% and Asia 12% in Q1. Key markets like India, Japan, Korea, and Turkey delivered strong results across channels and categories, with China showing positive progress under new leadership. The value brand Signature grew 16% following a product and brand reset, while Beyond Yoga grew 23%, narrowing its operating loss and reinforcing its path toward profitability.

    05

    Financial Discipline & Flow-Through Improvement

    The company is focused on improving flow-through, aiming to convert a higher percentage of revenue into profit. Adjusted SG&A grew 16% but was managed, with distribution expenses improving as a percentage of revenue. Leadership incentives are directly aligned with driving both revenue growth and profitability, with a long-term goal of achieving a 15% EBIT margin. The distribution network transformation is progressing, expected to be completed by midyear, supporting omnichannel growth and efficiency.

    06

    CFO Transition

    Harmit Singh announced his retirement as CFO and Chief Growth Officer after 13 years with the company. He will remain in his role until a successor is appointed and then serve as an adviser to ensure a seamless transition. A comprehensive search for the next CFO is underway, supported by a leading executive search firm, with confidence in the company's continued momentum and ability to deliver long-term profitable growth.

    AI-generated summary of the company’s earnings call. Not investment advice.