Levi Strauss reported better-than-expected fourth-quarter sales and profit, driven by resilient global demand for its denim jeans—particularly baggy and loose-fit styles popular with Gen Z and younger millennials—even as higher U.S. import tariffs and subdued domestic consumer spending weighed on the sector.
Key financial highlights (Q4)
- Net revenue: $1.77 billion (+1% YoY), beating analysts’ estimate of $1.71 billion
- Adjusted EPS: 41 cents, above the 39-cent consensus
- Europe: Revenues up 8%, signaling stronger demand momentum
- Americas: Revenues down 4%, reflecting inflation and macro uncertainty in the U.S.
Tariffs & pricing strategy
Levi Strauss said it expects to fully offset U.S. import tariffs through pricing actions across the year.
- Holiday inventory was secured early, reducing exposure.
- Modest price increases have already been implemented in the U.S., with some overseas adjustments planned.
- Lower product costs via vendor negotiations and a higher share of full-price sales are also supporting margins.
Portfolio reset & premium push
Over the past year, the company exited lower-margin businesses such as Denizen and Dockers in North America to sharpen focus on its core Levi’s brand. It has also introduced the premium Blue Tab line, targeting higher-income consumers who continue to spend despite broader pressures.
Outlook
- FY2026 net revenue growth: 5–6% (vs. ~5.4% expected by analysts)
- FY2026 adjusted EPS: $1.40–$1.46, slightly below the $1.48 consensus
Shares dipped about 2% in extended trading, reflecting investor caution around the softer profit outlook despite the Q4 beat.
Bottom line
Levi Strauss is demonstrating that product relevance, premiumisation, and direct-to-consumer strength can cushion tariff and demand headwinds. While the U.S. market remains pressured, Europe and global denim trends—especially relaxed fits—are providing a meaningful counterbalance heading into 2026.
