Levi Strauss & Co. (NYSE: LEVI) raised its fiscal 2026 profit outlook on October 7, 2026, after reporting third-quarter net revenues of $1.6 billion, up 4% from a year earlier. The San Francisco company now expects adjusted diluted earnings per share of $1.54 to $1.56, up from its earlier range of $1.46 to $1.52.
The results cover the quarter ended August 30, 2026, and exclude the Dockers business, which Levi Strauss now reports as discontinued operations. On an organic basis, which removes currency effects and certain other items, net revenues rose 5%.
The quarter included refunds of tariffs collected under the International Emergency Economic Powers Act, a 1977 federal law that gives the president powers to regulate trade during a declared national emergency. Levi Strauss said the refunds reduced cost of goods sold by $79 million and added $5 million of interest income.
#Tariff Refunds Lift Levi Strauss Third-Quarter Margins
Operating margin was 13.8% in the third quarter, compared with 10.8% a year earlier. Adjusted EBIT margin, a company measure that excludes taxes, interest, restructuring and certain other charges, rose to 15.5% from 11.8% in the same period of 2025.
The company said tariff refunds contributed 490 basis points of operating margin expansion, of which about 160 basis points were spent back on the business. After that redeployment, the net benefit from the refunds was 330 basis points.
Levi Strauss said the redeployed funds included additional promotion and marketing. That spending added $25 million of expense in the quarter, with $19 million affecting gross margin and $6 million recorded in selling, general and administrative costs.
Gross margin widened 450 basis points to 66.2%, compared with 61.7% a year earlier. Tariff refunds contributed 490 basis points of that expansion, of which about 120 basis points were redeployed, leaving a net refund benefit of 370 basis points.
Diluted earnings per share from continuing operations were $0.43 in the quarter, compared with $0.31 in the third quarter of 2025. Adjusted diluted earnings per share, which exclude restructuring charges and certain other items, were $0.48, compared with $0.34.
Tariff refunds contributed $0.16 of earnings per share, according to the company, and about $0.05 of that amount was redeployed into the business. The net refund benefit to earnings per share was $0.11, the company said in its third-quarter earnings release.
#Levi Strauss Wholesale Revenue Rises 6% as Direct Sales Trail
Wholesale net revenues, from sales through department stores and other retail partners, increased 6% to $882 million on both a reported and organic basis. The company said every region grew, with Europe and Asia posting the largest gains.
Direct-to-consumer net revenues, which cover the company's own stores and websites, rose 2% to $727 million. Comparable sales in that channel were flat, according to the company, after growing at a high-single-digit rate in the same quarter of 2025.
"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 U.S.," Michelle Gass, President and CEO, Levi Strauss & Co., said in the earnings release.
Asia net revenues rose 10% on an organic basis and 5% on a reported basis to $293 million. Operating income in the region increased 25% to $42 million.
In the Americas, the company's largest region, net revenues rose 4% on a reported basis to $839 million and 2% on an organic basis. U.S. net revenues fell 1% on a reported basis.
Europe net revenues increased 4% on a reported basis to $442 million and 5% on an organic basis. Beyond Yoga, the company's activewear brand, grew 9% to $36 million.
A sharper way to see the markets in just 5 minutes.
Same news, different lens. We cut through the noise and hand you the overlooked ideas and the deeper read the crowd misses. Join 38,000+ investors seeing the markets differently.
#Levi Strauss Lifts Profit Outlook and Plans $100 Million Buyback
Levi Strauss now forecasts adjusted EBIT margin of about 12.1% for the year ending November 29, 2026, up 70 basis points from the prior year. It also expects gross margin to rise 130 basis points, compared with an earlier forecast of a 10 basis point increase.
The company narrowed its revenue outlook, projecting organic growth of about 6% and reported growth of about 7%, which it attributed to foreign exchange. Its earlier forecast called for organic growth of 5.5% to 6% and reported growth of 7% to 7.5%.
The forecast includes about $60 million of tariff refunds that the company plans to redeploy for the full year, including roughly $35 million in the fourth quarter. Levi Strauss said the outlook assumes current tariff rates stay in effect for the rest of the year.
The company said it intends to enter into a $100 million accelerated share repurchase, where a bank buys a block of shares upfront and delivers them over time. Levi Strauss had $240 million remaining under its repurchase authorization as of August 30, 2026.
The company declared a quarterly dividend of $0.16 per share, which it said is a 14% increase over the prior year. The dividend is payable on November 4, 2026, to shareholders of record on October 21, 2026.
The company said its outlook assumes no significant worsening in consumer pressures, inflation, supply chain disruptions, tariffs or currency movements. Its full-year adjusted earnings forecast also includes an estimated $0.04 headwind from a tax rate about 2 points higher than in 2025.
Management projected mid-single-digit direct-to-consumer growth in the fourth quarter and adjusted diluted earnings per share of $1.54 to $1.56 for the year, though consumer demand, tariff policy, currency swings and the recovery in its own stores remain key risks to that outlook.