Oct 7, 2026 earnings call — Quarterly results, DTC traffic and tariff redeployments
Company reported net revenues up 5% organic and is redeploying most of $80 million tariff refunds into marketing, supply chain and promotions.
Revenue $1.6B (est $1.6B) · EPS $0.48 (est $0.36)
Key quotes
"Combined with the continued improvement in Europe, this gives us confidence that DTC will return to at least mid-single-digit growth in the fourth quarter and deliver high single-digit growth for the full year."
"During the third quarter, we recorded approximately $80 million of tariff refunds, reflecting substantially all the refunds we expect to receive."
"And together, these activations generated more than 3 billion impressions and approximately $45 million in earned media value."
Analyst Q&A 9
U.S. and Europe DTC sales trend
Q (Laurent Vasilescu · BNP Paribas): Analyst asked what drove the U.S. DTC underperformance in Q3, how the quarter progressed by month, whether U.S. and Europe will both grow mid-single digits in Q4, and whether recent positive trends match the mid-single-digit outlook.
A: Management said the Levi's brand is healthy everywhere. Europe weakness was weather-related and has recovered; U.S. weakness came from a back-to-school campaign that underperformed and a shift in consumer preference toward low rise. They pivoted marketing and product into low rise late in Q3, and DTC is now back to positive and tracking mid-single digits quarter-to-date.
"overall DTC is tracking right now quarter-to-date mid-single digits." — Michelle Gass (CEO)
Denim category health and margins outlook
Q (Matthew Boss · JPMorgan): Analyst asked whether the denim category is healthy beyond the intra-category shift, how September looks versus the 4Q 4% organic growth outlook, and about operating margin implications for next year given mid-single-digit revenue growth.
A: Management said the denim category remains healthy and competitive, and Levi's continues to lead and gain share across men, women and youth while expanding beyond denim into tops. On margins, they said the annual growth algorithm remains intact: mid-single-digit revenue growth alongside gross margin and EBIT margin expansion; they plan to lap tariff-related benefits and expect some 2026 expenses to be higher than 2027 as investments normalize.
"Overall, our view is that the annual growth algorithm is intact, which is really a mid-single-digit growth company with growth in gross margins and growth in EBIT margins." — Harmit Singh
Wholesale sell-through and prebooks
Q (Jay Sole · UBS): Analyst asked whether wholesale sell-through in the U.S. and Europe followed DTC trends and how sell-through affects order books and European prebooks for next spring.
A: Management said wholesale has performed well globally and is profitable across categories, with AURs and units up. Sell-through is healthy and prebooks in Europe are strong; quarter-to-quarter wholesale flows can ebb and flow by customer timing, so Q4 wholesale growth will be a little weaker than Q3 year-over-year but not due to weakening demand.
"But overall, wholesale has been performing well globally, including in the U.S." — Harmit Singh
Back-to-school miss and holiday plans
Q (Dana Telsey · Telsey Advisory Group): Analyst asked what went wrong with back-to-school, what will change for holiday (marketing, product), what competitive changes they see in price and style, and what the next year's theme might be.
A: Management said the back-to-school campaign was less impactful and traffic was soft, so they quickly pivoted to low rise with new creative, in-store remerchandising, and social content starting in September. For holiday they will lean into classic denim innovation plus tops and sweaters, with stronger marketing funded by tariff refunds, and they are confident they can win the season.
"So our intent is to win the holiday, and I'm confident we will." — Michelle Gass (CEO)
Tariff refund reinvestment and margin targets
Q (Rakesh Patel · Raymond James): Analyst asked if tariff-funded investments (marketing, supply chain, consumer value) will continue into next year and what minimum growth is needed to achieve operating leverage.
A: Management said the tariff refunds were timely and used to drive focused marketing, product acceleration and targeted promotions; they do not expect the incremental expenses to sustain into 2027. They believe mid-single-digit growth allows leverage to the P&L and remain focused on getting to 15% operating margins over time, noting prior years' margin progression.
"And so our view is a mid-single-digit growth does allow us to leverage to the P&L, and you'll see that flow through to EBIT." — Harmit Singh
Blue Tab premium line and collabs
Q (Robert Drbul · BTIG): Analyst asked about learnings from Blue Tab's double-digit growth and successes with collaborations, and what to expect for holiday collabs.
A: Management said Blue Tab is anchored in denim authority and targets super-premium price points across bottoms and a head-to-toe lifestyle with elevated fabrics and premium pieces, and they are still refining in-store merchandising. Collaborations lift brand heat; Sacai just launched and sold quickly, pop-ups and ROSE partnerships are driving strong demand in Asia, and they have more collaborations in the pipeline.
"As the denim leader, we have like less than a 1% market share of the super-premium jean category." — Michelle Gass (CEO)
U.S. distribution transition delay
Q (Kendall Toscano · BofA): Analyst asked why the U.S. distribution network transition is more complex than expected, when the intended $5 million per quarter savings will appear, and what challenges beyond the fire caused delays.
A: Management said the transition is more complex due to many SKUs, channels and customers and that a fire near quarter end disrupted key weeks, slowing the process. They closed the parallel Hebron facility at quarter end, expect 2026 to be the peak of transition costs, and are confident Groveport will fulfill demand and deliver benefits starting in 2027 though they are not yet giving detailed 2027 guidance.
"I do think a very important milestone that we achieved was closing our parallel Hebron facility." — Michelle Gass (CEO)
Q4 revenue guide and gross margin mechanics
Q (Irwin Boruchow · Wells Fargo): Analyst asked whether the Q4 revenue guide changed versus three months ago and asked for more detail on how the tariff refund reinvestment affects gross margin and whether that drag could linger.
A: Management said the Q4 revenue guide is a bit lower on a reported basis largely due to foreign exchange, which is a 100 basis point drag. On gross margin, they said they chose targeted promotions rather than broad price cuts, are timing promotions around holiday moments, and expect promotional activity to ramp down once better product and marketing drive performance, so they feel gross margins can continue to grow in 2027.
"Foreign exchange is a 100 basis point drag from that perspective." — Harmit Singh
How tariff refund was split and marketing level
Q (Brooke Roach · Goldman Sachs): Analyst asked for the proportion of the tariff refund invested across supply chain, marketing and promotions, which investments will pay off in 2027 and beyond, and how management thinks about maintaining higher marketing spend over coming years.
A: Management quantified the redeployment: they used roughly $60 million of the $80-odd million refund and split it about one-third to marketing, one-third to distribution and logistics, and one-third to promotional activities. They said Q3 was heavy on promotions and inventory clearance, Q4 focuses on advertising, marketing and distribution with lower promotions, and Michelle added they plan to keep investing in brand marketing if returns remain strong while pursuing gross-margin and distribution efficiency gains to reach 15% EBIT.
"I would say 1/3 is marketing, 1/3 is distribution and logistics and 1/3 is promotional activities." — Harmit Singh