Levi Strauss raised its full-year profit guidance on Wednesday, citing a 4.9 percentage point boost to operating margins from tariff refunds. Despite this earnings benefit, the denim retailer lowered its annual revenue growth forecast to 7%, as direct-to-consumer sales in the third quarter of 2026 fell short of internal expectations.
The company, which reported its fiscal third-quarter results for the period ending August 30, saw net income dip to $168.6 million, or 43 cents per share, compared to $218.1 million, or 55 cents per share, in the same period a year ago. While total sales rose approximately 4% to $1.61 billion, the results underscored a diverging performance between the brand’s wholesale partners and its own retail channels. While the company reported adjusted earnings of 48 cents per share, it faced a mixed reaction in the markets, with shares declining 1.3% in extended trading after an initial 7% jump. Seeking Alpha noted the results included a $10 million revenue miss alongside the earnings beat.
Tariff Refunds Boost Earnings per Share Outlook
The decision to lift the company’s adjusted earnings per share outlook for fiscal 2026 to a range of $1.54 to $1.56—up from the previous $1.46 to $1.52—is rooted largely in favorable trade policy adjustments. According to company disclosures, tariff refunds contributed a 16-cent benefit to earnings per share and provided a 4.9 percentage point boost to both operating and gross margins. Of that 16-cent benefit, the company redeployed 5 cents specifically to support business operations.
While the profit outlook improved, Levi Strauss tempered its revenue expectations. The company now projects net revenue growth at 7%, the lower end of its prior guidance range of 7% to 7.5%. Market analysts had previously anticipated an earnings range between $1.52 and $1.59, and revenue of approximately $1.62 billion, according to data compiled by LSEG. The reported adjusted diluted EPS of $0.48 beat analyst estimates by $0.12.
Direct-to-Consumer Performance and Holiday Strategy
The company’s direct-to-consumer (DTC) segment, which accounted for 45% of total net revenue in the quarter, grew by only 2%, with comparable sales remaining roughly flat. This stagnation in direct sales contrasted with a 6% increase in wholesale revenues, suggesting the brand’s retail partners are currently driving a larger portion of growth than its own storefronts and e-commerce sites. In the Americas, net revenue increased 4%, though the company saw a 1% decrease in U.S. revenue.
“While we delivered strong results across much of the business, our DTC performance fell short of our expectations during the quarter,” said CEO Michelle Gass. “We have a clear understanding of what worked and what did not, and we have already taken targeted actions to improve performance.”
Michelle Gass, CEO of Levi Strauss
To bolster its year-end performance, the company is redeploying 5 cents of the 16-cent per-share tariff refund benefit toward marketing and promotional efforts. Management expressed optimism that these investments, coupled with acceleration in recent trends, will place the DTC business on a path toward mid-single-digit growth during the fourth quarter. CEO Michelle Gass stated in a formal announcement that the company is encouraged by the strength it is seeing heading into the holiday season, including within the U.S. market.
John Vandemore Succeeds Harmit Singh as Chief Financial Officer
As Levi Strauss manages these mixed results, the company is preparing for a change in its executive suite. John Vandemore is set to join as executive vice president and chief financial officer on November 1, succeeding Harmit Singh, who announced his retirement in April. Vandemore arrives from Skechers, where he served as CFO for nine years, and holds an MBA from Northwestern University and a bachelor’s degree from Notre Dame. The incoming CFO’s background includes extensive finance leadership roles at companies including Walt Disney, Mattel, and International Game Technology. Harmit Singh will remain as chief financial and growth officer until the transition is complete, then serve as a special adviser through November 30.
Beyond operational adjustments, the company announced a $100 million accelerated share repurchase program and a 14% increase in its quarterly dividend. These moves, alongside the guidance revision, signal a focus on returning capital to shareholders even as the brand works to revitalize its direct-to-consumer growth trajectory.
Financial Results Summary
| Metric | Q3 2026 Performance |
|---|---|
| Net Revenue | $1.61 billion |
| Net Income | $168.6 million |
| Adjusted EPS | 48 cents |
| DTC Revenue Growth | 2% |
| Wholesale Revenue Growth | 6% |
