LS&Co said net revenues for the third quarter (Q3) ended 30 August rose to $1.6bn, with international and wholesale divisions offsetting more subdued performance in the US.
By operational segment, the Americas saw revenues increase 4% on a reported basis, but revenue in the US slipped by 1%. Elsewhere, Europe and Asia posted revenue rises of 4% and 5% respectively, with organic growth in Asia reaching 10%.
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The company’s Beyond Yoga business reported a 9% increase in revenue.
Levi’s direct-to-consumer (DTC) business delivered a 2% increase in quarterly revenue, with e-commerce up 10%.
Comparable sales across DTC operations were flat, and DTC represented 45% of total revenues for the quarter. Wholesale revenues grew 6%, with notable gains in Europe and Asia.
LS&Co president and CEO Michelle Gass said: “We saw strong growth in our international and wholesale businesses, and continued momentum across our lifestyle categories. While our direct-to-consumer business fell short of our internal expectations, we moved quickly to address the shortfall and are encouraged by the strength we are seeing heading into the holiday season, including in the US.
“Based on the acceleration in recent trends, our DTC business is on track to deliver mid-single-digit growth in the fourth quarter.”
Overall Performance of Levi Strauss & Co. in Q3
For Q3, the company reported an operating margin of 13.8%, up from 10.8% a year earlier, and adjusted earnings before interest and taxes (EBIT) margin of 15.5% compared to 11.8% previously, with the company attributing much of this margin expansion to the impact of tariff refunds.
Gross margin rose by 450 basis points to 66.2%, while net income from continuing operations increased to $169m from $122m a year earlier, driven in large part by these refunds and associated cost redeployments to support business initiatives.
Selling, general and administrative expenses climbed to $836m, which the company said was primarily a result of higher selling and distribution expenses as well as the reinvestment of tariff refund benefits into the business.
Despite these cost increases, diluted earnings per share from continuing operations rose to $0.43 from $0.31 and adjusted diluted earnings per share improved to $0.48 from $0.34, reflecting the positive overall impact of the tariff refunds.
Fiscal 2026 Outlook
Looking ahead, LS&Co anticipates reported net revenue growth of approximately 7%, narrowing its earlier outlook of 7.0% to 7.5% due to continued foreign exchange pressures.
On an organic basis, which excludes the impact of currency fluctuations, net revenue growth is forecast at around 6%, marking the top end of Levi’s previous projection range of 5.5% to 6.0%.
The company also expects significant gross margin expansion of 130 basis points over the prior year, a substantial revision from its previous estimate of a 10-basis point increase.
In terms of profitability, LS&Co has raised its FY26 adjusted diluted earnings per share guidance to a range of $1.54 to $1.56, compared to its earlier forecast of $1.46 to $1.52.
The revised guidance factors in the impact of IEEPA tariff refunds, with approximately $60m set to be redeployed into the business, including about $35m designated for the fourth quarter.
Earlier this year, LS&Co’s Q2 results demonstrated ongoing growth in both revenue and profitability as it increased its full-year FY26 outlook.
