Levi Strauss Q4 Results Beat Estimates

Levi Strauss & Co. reported Q4 results on Jan. 28, 2026, with strong denim demand and direct-to-consumer growth offsetting tariff pressure on margins. The company also set FY 2026 guidance.

Q4 Results, Margins, and FY 2025 Performance

Levi Strauss posted fourth-quarter net revenues of $1.77 billion, up 5.0% on an organic basis and above the $1.74 billion estimate. Adjusted diluted earnings per share reached $0.41, beating the $0.39 forecast. Gross profit was $1.07 billion, while gross margin declined 100 basis points to 60.8% due to higher import tariffs. Pricing and stronger full-price sell-through partially offset the margin pressure.

Adjusted selling, general and administrative expenses rose 2.6%, reflecting sales growth and transition costs related to U.S. distribution. Operating profit increased about 1.0% year over year to roughly $211 million.

For fiscal 2025, organic net revenues grew 7.0% to $6.3 billion. The company achieved a record gross margin and improved its adjusted EBIT margin by 70 basis points. Direct-to-consumer sales expanded 11%, now representing about half of total revenue, supported by high-single-digit comparable-store and e-commerce growth. Wholesale sales rose 4%, with women's and men's sales increasing 11% and 5%, respectively.

At year-end, Levi Strauss held $613 million in cash and reduced total liabilities by nearly 37% to $2.8 billion. President and CEO Michelle Gass said, "We've made deliberate strategic choices to maximize the potential of the Levi's brand, narrow our focus by exiting non-core businesses, and vigorously pursue our highest return growth opportunities."

FY 2026 Guidance and Shareholder Returns

Management forecast 4%–5% organic net-revenue growth for fiscal 2026, with an adjusted EBIT margin target of 11.8%–12.0%, an improvement of 40–60 basis points. Adjusted diluted EPS is expected between $1.40 and $1.46, with first-quarter adjusted EPS guided to $0.35–0.38. First-quarter organic net revenue growth is projected at 4%–5%, including a three-percentage-point foreign-exchange tailwind, bringing reported growth to about 7%–8%.

The company anticipates gross margin will remain roughly flat year over year despite a 150-basis-point tariff headwind, which it plans to offset through pricing, lower cotton costs, SKU rationalization, and product mix. Foreign exchange is expected to reduce margin by about 20 basis points. Adjusted SG&A expenses are forecast to improve by 40–60 basis points, driven by cost actions, artificial intelligence efficiencies, and talent hubs. Marketing spending is planned at about 7% of revenues, with a baseline return on invested capital near 16%.

Levi Strauss returned $363 million to shareholders in fiscal 2025, a 26% increase from the prior year, including a 7% dividend hike and approximately $150 million in share buybacks. About $55 million was returned in the fourth quarter. The company also authorized a $200 million accelerated share-repurchase program.

The transition of U.S. distribution to a hybrid model has been delayed, resulting in higher transitory costs through the first half of 2026. Inventory dollars rose about 9% year over year at fiscal year-end, with units increasing roughly 2%, changes management attributed partly to tariff pressures.