LEVI — Levi Strauss & Co.

Summary of Levi Strauss & Co. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Organic Net Revenue Growth: Up 9% year-over-year; reported growth at 14%.
• Adjusted EBIT Margin: 12.5% for the quarter; would have been 14.1% excluding increased advertising and promotion (A&P) expenses.
• Adjusted Diluted EPS: $0.42, up 11% from the previous year.
• DTC Channel Growth: Up 10% with comparable sales growth of 7%.
• Wholesale Channel Growth: Up 8%, driven by strong performance in women's and tops categories.
• International Markets: Contributed approximately 75% of total growth, with Europe up 10% and Asia up 12%.

2. Strategic Updates and Business Highlights:

• Leadership Transition: CFO Harmit Singh announced his retirement; a search for a successor is underway.
• DTC-first Strategy: Continued focus on becoming a direct-to-consumer lifestyle brand, with significant growth in e-commerce and store performance.
• Brand Engagement: Successful Super Bowl campaign generated over 1.4 billion media impressions, enhancing brand visibility.
• Product Innovation: Strong growth in women's (up 13%) and tops (up 13%), with new product lines and collaborations (e.g., Nike).
• Loyalty Program: Expanded to 46 million members, with loyalty members spending 40% more than non-members.

3. Forward Guidance and Outlook:

• Full-Year Revenue Growth: Guidance raised to 5.5% to 6.5% for reported growth and 4.5% to 5.5% for organic growth.
• Adjusted EBIT Margin: Expected to be approximately 12%, up from previous guidance of 11.8% to 12%.
• Adjusted Diluted EPS: Projected to be $1.42 to $1.48.
• Q2 Revenue Expectations: Anticipated growth of 4% to 5% reported and 3% to 4% organic, with a note of $30 million in revenue shift from Q1 to Q2 due to distribution timing.

4. Bad News, Challenges, or Points of Concern:

• Gross Margin Pressure: Slight contraction of 20 basis points year-over-year primarily due to tariffs, although partially offset by pricing actions.
• Distribution Costs: Ongoing transition of the distribution network may continue to impact margins; costs are expected to taper off in the second half of the year.
• Macroeconomic Environment: Concerns about potential impacts from inflation and uncertain economic conditions in Europe and North America.
• Tariff Risks: Current guidance does not incorporate potential changes in tariffs, which could affect future profitability.

5. Notable Q&A Insights:

• Sustaining Momentum: Management expressed confidence in maintaining growth momentum despite macroeconomic uncertainties, attributing success to strategic execution and consumer response.
• Pricing Strategy: No significant elasticity observed in demand due to recent price increases; management remains cautious yet optimistic about future pricing power.
• Regional Performance: Notable strength in Asia, particularly China, with positive early signs under new leadership.
• Distribution Network Transition: Management is focused on improving efficiency and reducing costs in the distribution network, with a commitment to achieving lower distribution expenses as a percentage of sales over time.

Overall, Levi Strauss & Co. reported a strong start to 2026, driven by strategic initiatives focused on brand engagement, product innovation, and a direct-to-consumer approach, while navigating challenges related to tariffs and distribution costs.