Key Points:
- Q3 revenue up 7% to $1.54B; EPS $0.34 beats estimates.
- Strong global DTC and denim sales offset tariffs.
- Price hikes, lean inventory, and early holiday prep boost margins.
Levi Strauss Lifts quarterly earnings above expectations as strategic price hikes, reduced discounting, and growth in direct-to-consumer sales helped the denim brand boost profits and raise its annual outlook.
The jeans maker said its decision to increase prices on select products did not hurt demand, as consumers continued to value its quality and brand reputation. Alongside higher margins, Levi’s also benefited from stronger U.S. sales and a growing women’s apparel segment, which helped offset the effects of global cost pressures and tariffs.
Price Adjustments Strengthen Margins
Levi’s third-quarter gross margin rose to 61.7%, up from 60.6% a year ago, surpassing Wall Street expectations. CEO Michelle Gass said in an interview that the company’s pricing strategy was “surgical and thoughtful,” noting that demand has remained steady despite modest increases.
“We know we’re a brand recognized for quality and value,” Gass said, emphasizing that Levi’s will continue to assess market reactions carefully as it plans further price adjustments in 2026.
Chief Financial Officer Harmit Singh added that while price hikes have contributed to improved margins, much of Levi’s revenue growth is driven by reduced discounting and an ongoing shift toward higher-margin direct sales channels.
Direct-to-Consumer and Product Expansion
Levi Strauss Lifts performance with strong growth in direct-to-consumer (DTC) operations. Revenue from Levi’s own stores and website increased 11% during the quarter, reflecting strong demand across the U.S. market. The company’s move away from wholesale distribution continues to pay off, yielding better profitability and stronger brand control.
Sales of women’s apparel rose 9%, with Levi’s noting sustained momentum in the denim category. The company has also been expanding into non-denim clothing, such as tops, which now represent nearly 40% of its overall business. This diversification helps reduce risk if denim trends shift and broadens Levi’s reach among new consumer groups.
Financial Results and Updated Outlook
Levi Strauss Lifts Q3 results with net income of $218 million, or 55 cents per share, up from $20.7 million last year. Adjusted EPS of 34 cents beat analyst expectations of 31 cents, according to LSEG data.
Revenue climbed 7% year-over-year to $1.54 billion, also beating forecasts. The company now expects full-year sales growth of about 3%, up from its previous projection of 1% to 2%, and adjusted earnings per share between $1.27 and $1.32.
Levi’s also reaffirmed its operating margin outlook of 11.4% to 11.6% and expects gross margins to increase by 1 percentage point, assuming current tariff levels remain unchanged for the remainder of the year.
Strategic Focus Under New Leadership
Levi Strauss Lifts brand strategy under CEO Michelle Gass by strengthening brand equity, expanding product categories, and enhancing digital engagement. The company continues to invest in improving online customer experiences and expanding its presence in women’s fashion — both seen as long-term growth opportunities.
Levi Strauss Lifts long-term outlook despite short-term challenges like tariffs and market volatility, Levi’s said its focus remains on sustainable profitability and maintaining consumer trust. With strong performance in its core categories and growing demand in new ones, the company sees continued potential for steady growth in the apparel market.
