Results reported October 7, 2026 (after market close) | NYSE: LEVI | Apparel and footwear
The Quick Take
Levi Strauss posted adjusted EPS of $0.48 against roughly $0.36 expected, but the beat is almost entirely a tariff refund. The refund added $0.16 per share before reinvestment (about $0.11 net), so underlying EPS was roughly $0.32 to $0.37, at or below consensus. Revenue of $1.61B was about $0.01B light of the $1.62B estimate. Full-year adjusted EPS guidance was raised to $1.54 to $1.56, but the lift reflects the refund rather than stronger demand. Management also admitted that direct-to-consumer (DTC) “fell short of our internal expectations.” In extended trading the shares were roughly flat to slightly higher near $19.50.
Results
| Metric | Q3 FY2026 | Prior year / vs. expectations |
|---|---|---|
| Net revenues | $1.61B | +4% reported, +5% organic (Q3 2025: $1.54B); consensus about $1.62B |
| Gross margin | 66.2% | +450 bps from 61.7% (tariff refunds added 490 bps, about 370 bps net of reinvestment) |
| Operating income | $222.3M (13.8% margin) | vs. $167.4M (10.8%) |
| Adjusted EBIT margin | 15.5% | vs. 11.8% (net tariff refund benefit about 330 bps) |
| Diluted EPS (continuing) | $0.43 | vs. $0.31 |
| Adjusted diluted EPS | $0.48 | vs. $0.34; consensus about $0.36 |
| Adjusted free cash flow | $44.3M | $427.3M year to date |
| Cash / liquidity | $641M / about $1.5B | Inventories down 3% YoY |
Regional and Channel Detail
- Americas: $839M, +4% reported, +2% organic. The U.S. fell 1%.
- Europe: $442M, +4% reported, +5% organic.
- Asia: $293M, +5% reported, +10% organic.
- Beyond Yoga: $36M, +9%.
- DTC (about 45% of sales): +2%, with comparable sales up only 0.4%. E-commerce grew 10%, which implies weakness in physical stores. U.S. DTC fell 1% and Europe DTC fell 2%.
- Wholesale: +6%, with strong growth in Europe and Asia.
Guidance (Raised)
| Metric | Updated FY2026 | Previous |
|---|---|---|
| Reported revenue growth | about 7.0% | 7.0% to 7.5% |
| Organic revenue growth | about 6.0% | 5.5% to 6.0% |
| Gross margin change | up about 130 bps | up about 10 bps |
| Adjusted EBIT margin | about 12.1% | about 12% |
| Adjusted diluted EPS | $1.54 to $1.56 | $1.46 to $1.52 |
Reported revenue growth was effectively trimmed (the range collapsed to its low end), and the revenue outlook of about $6.72B sits below the roughly $6.76B analysts expected. Management expects mid-single-digit DTC growth in Q4. The CFO said most of the tariff refund will be reinvested in the business across Q3 and Q4.
Capital Returns
- Quarterly dividend of $0.16 per share, up 14%.
- The $200M accelerated share repurchase settled in Q3, and a new $100M accelerated repurchase is planned. About $240M remains under the current authorization.
Why the Beat Is Lower Quality
Strip out the tariff refund and EPS is around $0.32 to $0.37 versus $0.36 expected, and margins would be far closer to last year’s. The refund is non-recurring, so it flatters the comparison and does not signal a lasting margin step-up. The real signals are mixed: wholesale and international are healthy, while the U.S. consumer and the company’s own stores are soft.
Risks
- A weak U.S. DTC business, the highest-margin channel and about 45% of sales.
- Dependence on non-recurring tariff refunds for the EPS beat and the guidance raise.
- Tariff policy reversals that could hit costs again.
- Wholesale strength may reflect channel restocking rather than consumer demand.
- Europe DTC softness and a cautious consumer.
- Reinvestment spending could cap the margin benefit in Q4.
Recommendation: HOLD
The balance sheet is clean, with about $1.5B of liquidity, shrinking inventories, steady dividend growth and ongoing buybacks. International and wholesale momentum is real. However, the headline beat is mostly one-time, revenue growth is slowing toward the low end of guidance, and management acknowledged a DTC miss. Current holders can stay for the dividend and buybacks. New buyers should wait for evidence that U.S. DTC has stabilized, or for a pullback, before adding.
This is educational analysis, not personalized investment advice. Do your own research before investing.
Sources: Levi Strauss & Co. Q3 fiscal 2026 earnings release (Form 8-K, October 7, 2026); Benzinga earnings coverage and consensus estimates.
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