Levi Strauss raised its full-year profit forecast to $1.54–$1.56 per share on October 7, 2026, bolstered by tariff refunds that widened operating margins to 13.8%. Despite this financial tailwind, the company lowered its annual revenue growth guidance to 7%—the bottom of its previous 7% to 7.5% range—due to weaker-than-expected performance in its direct-to-consumer stores and websites.
Tariff Refunds Boost Retail Profit Margins
The denim retailer’s updated financial outlook is largely tied to a significant windfall from IEEPA tariff refunds. These payouts contributed 4.9 percentage points to both the company’s operating and gross margins, helping push the operating margin to 13.8% for the fiscal third quarter, up from 10.8% during the same period last year. These refunds provided a 16-cent benefit to earnings per share.
In response to these results, Levi Strauss increased its adjusted earnings per share expectation for the 2026 fiscal year to a range of $1.54 to $1.56, rising from its previous forecast of $1.46 to $1.52. While this new guidance sits within the $1.52 to $1.59 range previously expected by analysts, the company’s revenue outlook remains a point of contention; while Finance19 noted the company set its growth at the low end of its prior forecast, Seeking Alpha highlighted a $10 million revenue miss against analyst expectations. Similar to other major retail chains like Target, Levi has also experienced a boost to its results from tariff refunds during the current year.
Direct-to-Consumer Performance Shortfalls
While wholesale revenues grew 6% during the quarter, the company’s direct-to-consumer (DTC) channel—which encompasses its own retail stores and e-commerce platforms—struggled. Net revenue in the DTC segment increased by only 2%, with comparable sales remaining roughly flat. Given that DTC accounts for 45% of the company’s total net revenue, this slowdown weighed on the overall quarterly results, even as U.S. revenue saw a 1% decline. The firm had previously reported that it was observing widespread expansion throughout its various business units, specifically citing its primary Levi’s line and its premium blue tab offerings.
To address these challenges, the company has redeployed to support the business,
with 5 cents of the per-share tariff benefit being redirected toward marketing and promotions specifically for the upcoming holiday shopping season. Seeking Alpha noted that these tariff-related benefits are expected to continue boosting margins into the fourth quarter.
Third Quarter Financial Results
For the three-month period ending August 30, 2026, Levi Strauss reported net income of $168.6 million, or 43 cents per share, a decrease from the $218.1 million, or 55 cents per share, reported in the same period a year prior. However, the company’s adjusted diluted EPS of $0.48 beat estimates by $0.12. Total sales rose roughly 4% to $1.61 billion, compared to the $1.62 billion Wall Street expected. According to Finance19, the company also announced a $100 million accelerated share repurchase program and a 14% increase in its quarterly dividend. Shares of Levi were roughly flat in extended trading after initially rising.
Leadership Transition
Byline: Marcus Lin
