Levi Strauss Raises 2026 Profit Outlook After Tariff Refunds
The apparel maker lifted full-year adjusted diluted EPS to $1.54–$1.56 and said it would start a $100 million buyback.
Levi Strauss & Co. (LEVI) raised its full-year 2026 profit outlook after a third quarter in which IEEPA tariff refunds lifted margins and earnings, even as reported sales growth slowed for a second consecutive quarter.
The jeanswear company now expects adjusted diluted earnings of $1.54 to $1.56 a share, up from a prior range of $1.46 to $1.52, and said gross margin would expand up to 130 basis points from the year-earlier level, versus a prior outlook of up 10 basis points. Adjusted EBIT margin is now expected to expand to about 12.1%, up 70 basis points, from a prior target of 12%. Reported net-revenue growth guidance was set at approximately 7.0% and organic growth at approximately 6.0%. The outlook includes IEEPA tariff refunds, of which the company is redeploying about $60 million for the full year, including about $35 million in the fourth quarter.
For the three months ended August 30, 2026, net revenues were $1.61 billion, up 4% as reported and 5% on an organic basis. That followed 8% reported and 6% organic growth in the second quarter, after 14% reported and 9% organic growth in the first.
Americas net revenues were $839 million, up 4% reported and 2% organic. The U.S. decreased 1% on a reported basis, reversing a 5% U.S. increase in the second quarter. Europe net revenues were $442 million, up 4% reported and 5% organic. Asia net revenues were $293 million, up 5% reported and 10% organic. Beyond Yoga net revenues were $36 million, up 9% on both bases.
Direct-to-consumer net revenues increased 2% on a reported and organic basis. DTC comparable sales growth was flat. DTC comprised 45% of total net revenues. Wholesale net revenues increased 6% on a reported and organic basis, with growth in all segments and particularly strong performance in Europe and Asia. E-commerce net revenues grew 10% on both bases.
President and CEO Michelle Gass said the direct-to-consumer business fell short of internal expectations and that the company moved quickly to address the shortfall. She said the DTC business is on track to deliver mid-single-digit growth in the fourth quarter based on acceleration in recent trends, including in the U.S.
Operating margin was 13.8%, compared with 10.8% a year earlier. Adjusted EBIT margin was 15.5%, versus 11.8%. Gross margin expanded 450 basis points to 66.2% from 61.7%. Tariff refunds contributed 490 basis points of gross-margin expansion, of which about 120 basis points were redeployed, leaving a 370-basis-point net benefit. Tariff refunds contributed 490 basis points of operating-margin expansion, of which about 160 basis points were redeployed, leaving a 330-basis-point net benefit.
Chief Financial and Growth Officer Harmit Singh said the company redeployed a majority of its tariff refund benefit back into the business during the third and fourth quarters to support future growth.
Selling, general and administrative expenses were $836 million. Adjusted SG&A was $817 million, up 6.2%. The remaining increase was driven primarily by selling and distribution expenses.
Net income from continuing operations was $169 million, versus $122 million a year earlier. Diluted earnings from continuing operations were $0.43 a share, versus $0.31. Adjusted diluted earnings were $0.48 a share, versus $0.34. Tariff refunds contributed $0.16 of EPS, of which about $0.05 was redeployed, for an $0.11 net benefit.
Cash and cash equivalents were $641 million, with total liquidity of about $1.5 billion. Inventories decreased 3% on a dollar basis from the year-earlier third quarter. The company returned $61.6 million in dividends in the quarter. A $200 million accelerated share repurchase launched in the first quarter settled in the third quarter, retiring about 1.6 million shares, for 9.4 million shares over the program. It declared a dividend of $0.16 a share, a 14% increase over the prior year.
The company intends to enter into an agreement to repurchase $100 million of Class A common stock.