Why is the guidance conservative given the strong performance? What drove the U.S. wholesale beat and is that momentum sustainable? What should we know about mix and promotions for future margins?

Harmit stated guidance prudence due to being early in the year and potential tariff changes. U.S. wholesale beat was driven by partners buying more women's and tops, reflecting DTC success, with long runway for growth. Michelle addressed denim momentum, stating the category is healthy and Levi's fuels growth through innovation, loyalty, and AI. “The real focus of the company, as Michelle pointed out, is to continue the momentum on the top line while converting a higher piece of that revenue into profitability.”

Can you clarify the commentary on Europe's Q2 organic revenue (flat) and quantify the $30M wholesale shift? What's the long-term expectation for distribution expenses as a percentage of sales, and how quickly can it return to 5%?

Harmit confirmed the $30M shift was primarily wholesale in Europe, impacting Q2, but H1 Europe growth is expected mid-single digit. He stated commitment to reducing U.S. DC transition costs, expecting tapering in H2, and that new supply chain leadership is focused on improving throughput and lowering costs, aiming for the 15% EBIT margin target over time. “U.S., we continue to be committed to reducing the transition cost as the year progresses, and we'll do it in a way where we prioritize the incremental demand that we are seeing with the costs incurred because we have seen volumes really pick up and fulfilling that has been great.”

How are you thinking about pricing power and elasticity in response to recent price increases? Does this give confidence for more pricing? What are the plans for markdowns in H2?

Michelle explained pricing is part of a premiumization strategy, not just tariff mitigation, focusing on full-price selling and innovation. No impact on demand seen, with growth equally driven by AUR and units. Improved execution and new systems are enhancing full-price selling and reducing markdowns. “growth for us in the quarter was driven equally between AUR and units, which really does speak to the power of the brand right now.”

LEVI

Levi Strauss (LEVI) Q1 FY26 earnings call: guidance and Q&A

Q: 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.”

Earnings call· Feb 2026 (Q1 FY26)· Consumer Discretionary· Apr 7, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year reported net revenue growth	up 5.5% to 6.5% high materiality	FY26	High
Full-year organic net revenue growth	up 4.5% to 5.5% high materiality	FY26	High
Full-year global wholesale growth	up low single digits medium materiality	FY26	High
Full-year gross margin	flat to slightly up high materiality	FY26	High
Full-year adjusted EBIT margin	approximately 12% high materiality	FY26	High
Full-year adjusted diluted EPS	$1.42 to $1.48 high materiality	FY26	High
Q2 reported revenues growth	up 4% to 5% medium materiality	Q2 · FY26	High
Q2 organic revenues growth	up 3% to 4% medium materiality	Q2 · FY26	High
Q2 gross margin	slightly down medium materiality	Q2 · FY26	Medium
Q2 adjusted EBIT margin	8% to 9% medium materiality	Q2 · FY26	High
Q2 adjusted diluted EPS	$0.22 to $0.24 medium materiality	Q2 · FY26	High
H1 EBIT margins	10% to 11% medium materiality	H1 FY26	High
H2 EBIT margins	13% to 14% medium materiality	H2 FY26	High
Europe H1 growth	mid-single digit medium materiality	H1 FY26	High
Europe Fall and Winter prebook	up high single digits low materiality	Fall/Winter season · FY26	High
A&P as percentage of sales	approximately flat year-over-year at around 7% low materiality	FY26	High
U.S. tariffs on imports from China	30% rate high materiality	FY26	High
U.S. tariffs on imports from rest of world	20% rate high materiality	FY26	High
Potential benefit if 10% tariffs stay	$35 million to COGS and $0.07 to EPS medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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

LEVI operating KPIs by quarter

LEVI operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Feb 2026 Q1 FY26	May 2026 Q2 FY26	Change vs prior quarter
Loyalty program members	46M Our loyalty program also continues to be a powerful driver of consumer engagement, reaching 46 million members globally, up 17% year-over-year with more than 2 million new members added in the first quarter. Source: earnings call transcript	<50M This quarter, we welcomed 3 million new members to our loyalty program, bringing global membership to nearly 50 million. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Behind Every Original	launch	Premiered during Super Bowl (Q1 FY26)
Rose (BLACKPINK) Partnership	expansion	New co-created pieces coming later this year
Nike Apparel Capsule and Denim Nike Air Jordan 3s	launch	Q1 FY26
Grunge Prep collection	launch	Q1 FY26
Spring and Summer global product assortment	roadmap	Spring and Summer (FY26)
Seek Beyond marketing campaign	launch	Recently launched (Q1 FY26)

Deals & partnerships

Dockers Successful closing of the Dockers transaction.

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

Risks & headwinds

Tariff Impact Q1 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 Uncertainty Full 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 Transition Planned 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

Europe Q2 Organic Revenue Growth

Q2 FY26

Current Q1 Europe organic revenue up 10%

Target Mid-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.

Find out whether LEVI delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.