Levi Strauss and Co raised its annual profit guidance after a third quarter deemed solid, by reinvesting in its business the tariff refunds received during the period. The group, described as the American denim specialist, saw its operating profit jump 32.8% year-on-year, to $222.3 million, over the three months ended 30 August 2026.
Revenue up across all regions
Net revenues rose 4% on a reported basis, to $1.6 billion, and 5% organically. Sales in the Amériques rose 4% despite a 1% decline in the États-Unis, while Europe posted +4% and Asia +5%. Net income from continuing operations, excluding the former Dockers business sold to Authentic Brands Group in February, jumped 38.5%, to $169 million. Gross margin widened by 450 basis points, to 66.2%.
Wholesale clearly outperformed direct-to-consumer trade: +6% against +2% for DTC, whose comparable sales were flat over the quarter. The Beyond Yoga brand, owned by the group, posted 9% growth in total revenues, both reported and organic.
L'effet of tariff refunds
Levi Strauss received $79 million in refunds recorded against cost of goods sold and $5 million in related interest income, for a tax impact of $20 million. These refunds, under the Emergency Economic Powers Act, contributed 490 basis points to the quarter's margin expansion. The group chose to reinvest $60 million of this back into the business. « Nous avons décidé de réaffecter la majorité du bénéfice lié aux remboursements de droits de douane à l'activité durant les troisième et quatrième trimestres pour soutenir la croissance future. Reflétant notre confiance dans nos perspectives, nous relevons nos prévisions de bénéfice annuel et prévoyons de lancer un programme de rachat d'actions accéléré de 100 millions de dollars », said Harmit Singh, the group's chief financial and growth officer.
American direct-to-consumer trade in decline
Reste that DTC momentum disappointed in the États-Unis. « Aux États-Unis, notre campagne de rentrée scolaire n'a pas répondu à nos attentes et n'a pas généré le niveau de trafic et de demande que nous anticipions », acknowledged Michelle Gass, the group's president and chief executive officer. In Europe, store footfall was also hurt by heatwaves, according to the executive. Face a denim market deemed more competitive, the company carried out a marketing pivot during the quarter. « Nous avons mis la priorité, en magasin comme dans notre communication, sur certaines de nos coupes phares, low, low loose, super low, low straight. Nous avons augmenté nos investissements médias. Il fallait percer. L'argent des remboursements de droits de douane nous l'a permis », explained Michelle Gass, who now expects DTC growth of a few percentage points in the fourth quarter.
The executive, who has relied for more than a decade on the development of direct-to-consumer trade, and who led a one-year marketing partnership in 2025 with Beyoncé Knowles-Carter, judged that « ce n'était qu'un accident de parcours, mais je suis confiante que nous allons en ressortir encore plus forts en vue de 2027 ». The group said it is revising its marketing strategy for the remainder of the fiscal year and the following year, while confirming the launch of the $100 million share buyback programme.
