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    LEVI
    Earnings call· May 2026(Q2 FY26)

    LEVI STRAUSS & Q2 FY26 earnings call LEVI

    Jul 8, 2026 Source

    Executive summary

    Levi Strauss & Co. Q2 FY26 — Strong Growth Across Channels and Geographies, Guidance Raised

    Levi Strauss & Co. delivered a strong Q2 FY26, with broad-based organic revenue growth of 6% driven by DTC and international markets. The company's strategic evolution into a DTC-first lifestyle brand is yielding consistent momentum, expanding its addressable market, and improving profitability. Management raised full-year guidance, reflecting confidence in continued execution and the resilience of its consumer base despite external uncertainties.

    Highlights

    5

    • Organic net revenues increased 6%, exceeding expectations across the top and bottom line.

    • Direct-to-consumer (DTC) revenue grew 8%, with comparable sales up 6% for the 17th consecutive quarter.

    • The women's business grew 11%, contributing to extended market share leadership in both men's and women's denim.

    • Adjusted diluted EPS grew 27% year-over-year to $0.28, ahead of guidance.

    • Full-year revenue and EPS guidance was raised for the second consecutive quarter, reflecting strong performance and momentum.

    Concerns

    3

    • Europe revenue declined 1% in Q2, reflecting the impact of last year's distribution center transition.

    • The U.S. distribution center transition has taken longer than planned, though it remains on track for completion by Q4.

    • Tariffs continued to be a headwind, contributing to a 40 basis point decline in Americas operating margin.

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year reported net revenues
    increase 7% to 7.5%
    high materiality
    High
    Full-year organic net revenues
    up 5.5% to 6%
    high materiality
    High
    Full-year gross margin
    expand approximately 10 basis points to prior year
    medium materiality
    High
    Full-year adjusted EBIT margin
    12%
    high materiality
    High
    Full-year adjusted diluted EPS
    approximately $1.46 to $1.52
    high materiality
    High
    Full-year store openings
    50 to 60 net new doors
    medium materiality
    High
    Q3 reported and organic net revenues
    up 4% to 5%
    medium materiality
    High
    Q3 gross margin
    expand around 10 basis points versus prior year to 61.8%
    medium materiality
    High
    Q3 adjusted EBIT margin
    leverages approximately 10 basis points to 11.9%
    medium materiality
    High
    Q3 adjusted diluted EPS
    approximately $0.34 to $0.36
    high materiality
    High
    Capital return to shareholders
    at least 55% to 65% of free cash flow
    high materiality
    High
    Q3 quarterly dividend
    increasing by $0.02 to $0.16 per share
    high materiality
    High
    Long-term revenue target
    $10 billion
    high materiality
    High
    Long-term operating margin target
    15%
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Americas
    Overall growth driven by momentum in both DTC and wholesale. Operating margin declined due to the unfavorable impact of tariffs, partially offset by cost initiatives and pricing actions.
    U.S. growth: 5%
    		—7%—declined 40 basis points
    Europe
    Q2 decline reflects last year's distribution center transition. Underlying trends remain healthy with strength in key markets including Germany and the U.K. Operating margin driven by gross margin strength and lower distribution expenses.
    First half revenue growth: mid-single digitDTC growth: 7%Wholesale preorder growth for H2: high single-digit
    		—declined 1%—increased nearly 400 basis points to 21.1%
    Asia
    Fueled by double-digit growth across both DTC and wholesale. Performance was strong across markets as consumers continue to gravitate towards the expanded denim lifestyle assortment. China is beginning to see signs of progress with a return to growth.
    		—increased 12%—15%, expanding 350 basis points versus prior year
    Latin America
    Momentum is accelerating, led by Brazil, the Andes, and Colombia. Mexico is the second largest market globally and a key contributor to international performance.
    Mexico Q2 growth: 15%
    		—double-digit growth——
    Signature (brand)
    Value-focused brand. Expected to accelerate in the second half of the year, supported by an expanded lifestyle assortment including a broader tops offering.
    First half growth: 9%
    		—low single-digit rate——
    Beyond Yoga (brand)
    Led by strength in e-commerce. Momentum continues to be fueled by newness and expansion into lifestyle categories, including the launch of a new linen capsule.
    		—16%——

    Operational metrics

    21
    Direct-to-consumer (DTC) revenue
    8%YoY
    Q2 FY26

    Comprised over half of total company revenue.

    Direct-to-consumer (DTC) comparable sales
    6%YoY
    Q2 FY26

    Underscoring the strength of retail execution with gains across key store KPIs.

    Global wholesale revenue
    3%YoY
    Q2 FY26

    Led by strength across customers in U.S. wholesale.

    Women's business growth
    11%YoY
    Q2 FY26

    Driving outsized performance and extending market share position.

    Bottoms business growth
    6%YoY
    Q2 FY26

    Driven by strength in core fits with newness adding incremental momentum.

    Tops business growth
    5%YoY
    Q2 FY26

    Impacted by the European distribution center transition last year; newer categories like blouses, wovens, sweaters, and polos are driving strong growth.

    Shorts category growth
    11%YoY
    Q2 FY26

    Expanded assortment resonating with consumers.

    White denim growth (women's)
    70%YoY
    Q2 FY26

    Exceptional strength in seasonal trends.

    E-commerce channel growth
    17%YoY
    Q2 FY26

    Fueled by solid performance across all key metrics including increased traffic, better conversion, higher UPT, and AUR growth as promotional activity was reduced.

    Loyalty program members
    50 million3 million new members this quarter
    Q2 FY26

    Continuing to enhance the program through more personalized experiences and leveraging data.

    Adjusted SG&A increase
    6.5%YoY
    Q2 FY26

    As a percentage of revenue, adjusted SG&A leveraged 80 basis points.

    Adjusted EBIT dollars growth
    18%YoY
    Q2 FY26

    Grew much faster than revenue growth, reflecting strong flow-through.

    Inventory change
    down 7%YoY
    Q2 FY26

    Healthy mix of current products across regions, reflecting stronger inventory management and continued progress in reducing excess and obsolete.

    Q3 quarterly dividend increase
    $0.02double our annual increase over each of the past 2 years
    Q3 FY26

    Reflecting confidence in earnings and free cash flow generation.

    Tariff refunds paid to date
    $80 million
    to date

    Not built into internal results or guidance; applications for refunds have just started.

    Foreign exchange tailwind to full-year sales
    150 basis pointversus previous expectation of 100 basis point benefit
    FY26

    All of which has already been realized in H1.

    Q3 adjusted diluted EPS headwind
    $0.02 to $0.03
    Q3 FY26

    Included in the Q3 adjusted diluted EPS guidance.

    Adjusted EBIT margin increase (last 3 years)
    60 basis pointsup
    FY26

    Expected to end the year with this increase, continuing the trajectory over the last 3 years.

    Unit growth contribution to revenue
    2/3
    Q2 FY26

    The remaining 1/3 of growth was contributed by AUR.

    AUR growth contribution to revenue
    1/3
    Q2 FY26

    The remaining 2/3 of growth was contributed by units.

    Blue Tab growth
    40%YoY
    Q2 FY26

    Relatively small business today, but with significant runway ahead to scale.

    Industry KPIs

    12
    MetricValueDetails
    China trajectoryreturn to growth
    Effective tax rate—
    Inventory positiondown 7%%
    Revenue by channelDTC up 8%, wholesale up 3%%
    Gross margin bridgeexpanded 10 basis points to 62.7%bps
    Revenue by geographyInternational up 6%, U.S. up 5%, Asia up 12%, Latin America double-digit growth%
    Operating margin sg aAdjusted EBIT margin expanded 70 basis points to 9%bps
    Store fleet door investment50 to 60 net new doorsdoors
    Share buyback capital return$0.16 per shareUSD
    Tariff cost exposure recoveryapproximately $80 millionUSD
    Wholesale order book directionup high single-digit%
    Franchise product cycle performanceWomen's up 11%; Bottoms up 6%; Tops up 5% (7% ex-Europe DC impact); Shorts up 11%; White denim (women's) up 70%%

    Product announcements

    2
    ProductTypeDetails
    Denim product collaborations with Football Federationslaunch
    Linen capsule (Beyond Yoga)launch

    Risks & headwinds

    4
    Tariff environment uncertaintyFull year

    Incremental U.S. tariffs on imports from China at a 30% rate and the rest of the world at 20%

    Mitigation: Full-year guidance continues to assume these rates and does not assume any benefit from potential tariff refunds ($80 million paid to date).

    Europe distribution center transition impactLast year (Q2 FY25)

    2 point drag on net revenues

    Mitigation: The remap to an omni-channel distribution network was completed, and the company is seeing benefits in operational efficiency, distribution expense leverage, and profitability in Europe.

    U.S. distribution center transition delaysOn track to complete by the beginning of the fourth quarter

    Transition has taken longer than planned

    Mitigation: Balancing strong demand with the operational shift; expects to eliminate duplicated costs, simplify the operating model, and improve inventory and service levels upon completion.

    Higher tax rate and foreign exchange impacting gross marginQ3 FY26

    $0.02 to $0.03 headwind to Q3 adjusted diluted EPS

    Mitigation: This headwind is included in the Q3 adjusted diluted EPS guidance.

    Q&A highlights

    8

    Inquired about the slowdown in Signature's Q2 growth compared to Q1 and the acceleration of European DTC, asking for Q3 outlook and confidence in full-year Europe guidance.

    Michelle explained Signature's Q2 was part of a broader H1 growth of 9%, with expectations for H2 acceleration driven by new lifestyle offerings and women's business. Harmit clarified Europe's Q2 was impacted by the DC transition, but underlying DTC trends are strong (mid-to-high single-digit expectation for H2), and high single-digit wholesale prebooks support full-year mid-single-digit growth.

    “Europe in sort of minus 7 would have been -- sorry, minus 1 would have been plus 7, so that's Fact #1.”

    asked by Laurent Vasilescu · answered by Harmit Singh

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Evolution and Market Opportunity

    Levi's is successfully transforming into a DTC-first lifestyle company, driving consistent growth and expanding its addressable market. The denim category is projected to grow mid-single digits annually through 2030, outpacing historical growth, and Levi's, as the market share leader, is uniquely positioned to capture this opportunity through innovation in fit and fabrics. The expanded total addressable market (TAM) contributed roughly one-third of Q2 revenue growth, reinforcing the traction of the denim lifestyle strategy.

    02

    Brand-Led Marketing Success

    The 'Behind Every Original' campaign, launched during the Super Bowl, continued to build brand heat globally and locally, featuring cultural icons like Doechii, Questlove, and SGA, alongside local talent such as Belinda and Alia Bhatt. A viral marketing campaign around the global soccer championship at Levi's Stadium, which turned a branding restriction into a social media moment, generated approximately 1 billion press impressions, demonstrating agile execution and cultural relevance. Collaborations with K-pop star ROSÉ in Asian markets also fueled the women's business.

    03

    Product Innovation Driving Growth

    The bottoms business grew 6% in Q2, driven by strength in core fits and newness, with looser silhouettes like 501 '90s for her and 501 Loose for him performing strongly. Categories beyond denim bottoms, including lightweight denim, linen shirts, dresses, and shorts (up 11%), contributed significantly to growth, expanding the head-to-toe offerings for consumers. White denim in women's saw exceptional strength, growing 70% in the quarter.

    04

    DTC-First Retailer Momentum

    Global direct-to-consumer (DTC) revenue increased 8% in Q2, comprising 51% of total company revenue, with comparable sales up 6% for the 17th consecutive quarter. E-commerce grew 17%, fueled by increased traffic, better conversion, and higher UPT/AUR due to reduced promotional activity. The loyalty program welcomed 3 million new members, bringing global membership to nearly 50 million, enhancing personalized experiences and leveraging data.

    05

    International and Brand Portfolio Strength

    International revenue grew 6%, led by double-digit gains in Asia (up 12%) and Latin America (double-digit growth, with Mexico up 15%). China showed early signs of progress with a return to growth and improving underlying trends, supported by new leadership. Beyond Yoga grew 16%, driven by e-commerce and expansion into lifestyle categories like a new linen capsule. Signature, the value-focused brand, grew at a low single-digit rate in Q2 but was up 9% for the first half of the year.

    06

    Infrastructure Transformation Progress

    The company completed the remap of Europe to an omni-channel distribution network at the end of Q2, consolidating e-commerce fulfillment and realizing benefits in operational efficiency and profitability. The U.S. distribution center transition to Maersk is on track for Q4, aiming to eliminate duplicated costs and improve service levels. A global ERP transformation is also progressing, with Asia and Beyond Yoga migrated onto the new platform, and Europe/Latin America on track for mid-2027 completion, enabling faster decision-making and AI/automation scaling.

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