Levi Strauss & Co. Reports Strong Q1 2026 Results, Raises Full-Year Guidance with 14% Revenue Growth and Increased Shareholder Returns 1

Levi Strauss & Co. Q1 2026 Earnings Report: Key Investor Takeaways

Robust Q1 Performance Surpasses Guidance

Levi Strauss & Co. (NYSE: LEVI) reported a strong first quarter for fiscal 2026, with sales, margins, and earnings per share coming in above previous guidance. The company delivered organic net revenue growth of 9% and reported diluted EPS from continuing operations of \$0.45, with adjusted diluted EPS at \$0.42. Management has raised its outlook for full-year 2026, including net revenue, margins, and EPS.

Key Financial Highlights

Net Revenues: \$1.7 billion, up 14% on a reported basis and 9% organically.
Americas: Net revenues up 9% reported, 7% organic; US up 4% both reported and organic.
Europe: Net revenues up 24% reported, 10% organic.
Asia: Net revenues up 13% reported, 12% organic.
Beyond Yoga®: Up 23% both reported and organic.
Direct-to-Consumer (DTC): Net revenues up 16% reported, 10% organic; DTC accounts for 52% of total net revenues.
E-commerce: Net revenues grew 21% reported, 17% organic.
Wholesale: Net revenues up 12% reported, 8% organic.
Operating Margin: 11.4% (vs 12.5% last year); Adjusted EBIT margin 12.5% (vs 13.4%).
Gross Margin: 61.9% (vs 62.1% last year), due to tariffs offset by price increases and lower promotions.
SG&A Expenses: \$872 million (up from \$749 million), primarily due to higher advertising, sales volume, and FX.
Net Income from Continuing Operations: \$177 million (up from \$140 million).
Adjusted Net Income: \$167 million (up from \$150 million).
Effective Income Tax Rate: 22.4% (vs 20.6%).

Balance Sheet and Liquidity

Cash and Cash Equivalents: \$717 million
Total Liquidity: ~\$1.6 billion
Total Inventories: Up 4% year-over-year

Dockers® Sale & Discontinued Operations

Levi completed the sale of Dockers® business in the US and Canada in July 2025, and the remaining operations in Q1 2026, finalizing in February 2026. Dockers® results are now reported as discontinued operations.

Leadership Transition

Harmit Singh, EVP and Chief Financial & Growth Officer, will retire after a successor is appointed, transitioning first to Special Advisor. A search for his replacement is underway. Leadership transitions, especially in the CFO role, are potentially price-sensitive and may affect investor sentiment.

Shareholder Returns and Capital Allocation

Returns to Shareholders: \$214 million in Q1, up 163% YoY.
Dividends: \$54 million (\$0.14/share), up 5% YoY.
Share Repurchase: \$200 million accelerated program launched; 8 million shares retired (\$160 million based on Jan 29, 2026 closing price). \$240 million remains authorized, no expiration.

Fiscal 2026 Guidance (Raised)

Reported Net Revenue Growth: 5.5% to 6.5% (previously 5% to 6%)
Organic Revenue Growth: 4.5% to 5.5% (previously 4% to 5%)
Gross Margin: Flat to slightly up (previously flat)
Adjusted EBIT Margin: Expanding to ~12% (previously 11.8% to 12%)
Tax Rate: ~23% (2 points higher YoY)
Adjusted Diluted EPS: \$1.42 to \$1.48 (previously \$1.40 to \$1.46); includes \$0.04 headwind from higher tax rate

This guidance assumes no worsening macroeconomic pressures, inflation, supply chain disruptions, tariffs, or currency fluctuations.

Direct-to-Consumer (DTC) Strategy and Growth

Levi’s DTC-first denim lifestyle brand strategy is delivering faster and more consistent growth, capturing a larger addressable market. DTC comparable sales grew 7% (high-single digits), with DTC now accounting for over half of total net revenues.

Non-GAAP Metrics and Accounting Notes

Levi Strauss & Co. uses non-GAAP financial measures (Adjusted SG&A, EBIT, EBITDA, net income, EPS, free cash flow, ROIC, organic net revenues, constant-currency metrics) to provide transparency and insight into core performance. Investors should review reconciliations and note these metrics have limitations and may not be comparable to other companies.

Risks and Forward-Looking Statements

Risks include tariff impacts, FX fluctuations, supply chain disruptions, inflation, consumer spending, and restructuring.
Forward-looking statements are based on current assumptions and subject to uncertainties; actual results may differ.
Investors are cautioned not to place undue reliance on these statements.

Potential Price-Sensitive Factors

Raised FY2026 guidance is positive and could impact valuation and share price.
Leadership transition (retirement of CFGO Harmit Singh) may affect sentiment.
Large share repurchase program and increased dividend signal confidence and capital return.
Dockers® sale completed, focus now on core Levi brands.
Strong DTC and e-commerce performance shows strategic progress.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. All forward-looking statements are subject to risks and uncertainties. Investors should refer to Levi Strauss & Co.’s filings with the SEC for more detailed information and should not rely solely on this article for investment decisions.