EL7.AI
StocksMedium•30 October 2026•
4 min read

Levi Strauss Raises EPS Forecast to $1.56 Despite Slower Direct-to-Consumer Sales

Key Facts

1Levi Strauss raised its adjusted 2026 EPS forecast to $1.54–$1.56, from $1.46–$1.52.
2Third-quarter revenue was $1.610 billion, up 4% on a reported basis and 5% organically.
3Gross margin rose to 66.2% from 61.7%, an increase of 450 basis points.
4The company expects organic revenue growth of about 6% in 2026, compared with reported growth of about 7%.

Levi Strauss raised its adjusted diluted EPS forecast for fiscal 2026 to a range of $1.54–$1.56, from $1.46–$1.52 previously, after reporting on October 7 results for the third quarter ended August 30. The company said the new forecast includes an approximately $0.04-per-share negative impact from a higher tax rate. The higher earnings forecast came alongside gross-margin expansion and improved quarterly earnings, although direct-to-consumer store sales fell short of management's expectations. Reported revenue rose 4% to $1.610 billion, compared with $1.543 billion in the same period a year earlier. On an organic basis, which excludes the effects of foreign exchange and acquisitions, revenue increased 5%.

Adjusted diluted EPS was $0.48, compared with $0.34 in the third quarter of 2025, while diluted earnings from continuing operations under accounting standards rose to $0.43 from $0.31. Gross margin increased to 66.2% from 61.7%, a year-on-year gain of 450 basis points. The company attributed 490 basis points of margin expansion to tariff refunds, but said it reinvested about 120 basis points of that amount to support the business. As a result, the full contribution from the refunds does not represent margin gains retained, since part of it was used for business-related spending. The company raised its full-year gross-margin expansion forecast to 130 basis points above the prior year, from its previous forecast of a 10-basis-point increase.

Levi Strauss expects organic revenue growth of about 6% in fiscal 2026, the upper end of its previous range of 5.5% to 6%. But it cut its forecast for reported revenue growth to about 7%, from a range of 7% to 7.5%, citing foreign-exchange effects. The revision combines an organic growth forecast at the previous range's high end with a weaker outlook for nominal revenue, while EPS and margin estimates rose. Second-quarter revenue increased 8% on a reported basis and 6% organically, making third-quarter growth slower than in the prior period on both bases. The company's fiscal year ends on November 29, 2026.

Performance varied by channel: wholesale revenue increased 6% on both reported and organic bases, while e-commerce revenue grew 10% on both bases. Comparable direct-to-consumer sales rose just 0.4%, and the channel accounted for 45% of total quarterly revenue. The chief executive said direct-to-consumer sales "came in below our internal expectations," but expected mid-single-digit growth in the fourth quarter as recent trends improve. Meanwhile, total inventory fell 3% in dollar terms compared with the third quarter of the prior year. Adjusted selling, general and administrative expenses rose 6.2% to $817 million from $769 million, with the company attributing the rest of the increase mainly to selling and distribution expenses.

By region, organic revenue rose 2% in the Americas, 5% in Europe and 10% in Asia, while U.S. revenue fell 1% on a reported basis. Reuters reported that the company's shares fell 2% in extended trading after the results, amid weaker-than-expected sales in the United States and Europe. The company said it received $79 million in refunds of International Emergency Economic Powers Act tariffs during the quarter ended August 30, and plans to reinvest about $60 million of them during the year in promotions and marketing. That amount includes about $35 million in the fourth quarter, according to the company's filing, assuming current tariff rates remain in place through year-end. The company is scheduled to pay a cash dividend of $0.16 per share on November 4 to shareholders of record on October 21.

Levi Strauss also announced its intention to enter into a $100 million accelerated share repurchase agreement for Class A shares. In the third quarter, the company completed settlement of a previous accelerated share repurchase program and received and retired about 1.6 million shares during the quarter. The new program was announced alongside the cash dividend scheduled for November, while the current fiscal-year outlook remains framed by the November 29 year-end. In July, EL7 covered the company's annual forecast increase following earlier quarterly results. The third-quarter results now focus attention on a mix of revenue growth, channel and regional performance, and the contribution of tariff refunds to the new earnings estimates.