Levi Strauss & Co. has upgraded its financial outlook for fiscal 2026 after delivering stronger-than-expected second-quarter results, supported by higher sales, improved profitability, and continued momentum across its global business.
For the quarter ending 31 May 2026, the company reported net revenue of US$1.6 billion, representing an 8% increase on a reported basis and 6% organic growth compared with the same period last year. The performance has prompted management to revise its full-year expectations upward.
Reflecting this positive trend, Levi Strauss FY26 outlook now forecasts reported revenue growth of 7% to 7.5%, an improvement from the previous guidance of 5.5% to 6.5%. Organic revenue growth expectations have also been increased to 5.5%–6.0%.
The company additionally raised its projections for adjusted diluted earnings per share (EPS) to between US$1.46 and US$1.52, while expecting an adjusted EBIT margin of 12%, both exceeding earlier forecasts.
Growth Across Key Markets
Levi Strauss recorded revenue growth in most major regions during the quarter. The Americas remained the strongest contributor, with reported sales increasing 9%, while the United States market delivered 5% growth.
European revenue advanced 4% on a reported basis, although organic sales declined 1% because of shipment timing related to distribution centre operations during the previous year.
Asia continued to perform strongly, with reported revenue climbing 10% and organic sales increasing 12%, highlighting sustained consumer demand across the region.
Profitability Continues to Improve
The company reported net income from continuing operations of US$95 million, compared with US$80 million in the corresponding quarter of the previous year. Diluted earnings per share from continuing operations increased from US$0.20 to US$0.24.
Adjusted EBIT margin improved to 9.0%, compared with 8.3% a year earlier, while gross margin expanded slightly to 62.7%. The improvement was driven by lower product costs and strategic pricing initiatives, although tariff expenses and currency fluctuations continued to create headwinds.
Operating margin also edged higher, reaching 7.8%, compared with 7.5% in the prior-year period.
Selling, general and administrative (SG&A) expenses rose to US$843 million, mainly reflecting higher selling costs and the impact of foreign exchange movements.
Direct-to-Consumer Business Drives Momentum
Direct-to-consumer (DTC) operations remained the company’s fastest-growing business segment during the quarter. Reported DTC revenue increased 11%, while organic growth reached 8%.
Online sales performed particularly well, rising 19% on a reported basis and 17% organically. Comparable sales across DTC channels also improved by 6%, reinforcing the company’s ongoing digital and retail strategy.
Overall, DTC operations contributed 51% of total quarterly revenue, while wholesale revenue increased 5% on a reported basis and 3% organically.
Outlook Remains Positive
The updated Levi Strauss FY26 outlook assumes that US import tariffs will remain at 30% for goods sourced from China and 20% for imports from other countries. The company also expects broader economic conditions to remain relatively stable, without major increases in inflation, supply chain disruptions, tariff changes, or currency volatility.
Commenting on the results, President and CEO Michelle Gass said: “The Levi’s brand is connecting with consumers around the world in more powerful ways than ever before, and our Q2 results are another proof point that our strategies are working and our team is executing. Our evolution into a DTC-first, denim lifestyle company—with a much larger addressable market—is translating to faster growth and higher profitability. While we are pleased with the progress, we are still in the early stages of our long-term growth journey, with more ways to win than ever before.”
