Levi Strauss & Co. (NYSE:LEVI) executives highlighted broad-based growth, continued progress in its direct-to-consumer (DTC) transformation, and plans to mitigate tariff-related pressures during the company’s fiscal fourth-quarter earnings call for the period ended November 30, 2025.
Full-year performance and strategic focus
President and CEO Michelle Gass said fiscal 2025 marked a “strong year” as the company advanced its strategy to become a “DTC first, head-to-toe denim lifestyle retailer.” Levi Strauss reported organic net revenue growth of 7% for the year, which management said was broad-based across channels and categories.
Gass also said the company delivered its “highest-ever gross margin” in fiscal 2025 and expanded adjusted EBIT margin, though detailed full-year margin figures were not provided in prepared remarks.
Fourth-quarter results and holiday momentum
For the fourth quarter, management said total company revenues increased 5% (organic net revenues also grew 5%). Gass noted growth continued through the holidays, with 7% growth during the November-December period, which the company said was its highest holiday revenue in at least a decade.
On the brand and product front, Gass said the Levi’s brand grew 4% in Q4, driven by strength in men’s and faster growth in women’s. She pointed to increased “brand heat,” citing higher social engagement and brand equity gains versus last year, and referenced collaborations including Barbour and a limited-edition footwear launch with Nike and Nigo. Gass also cited marketing efforts such as the final chapter of the “Reimagine” campaign with Beyoncé and a men’s campaign featuring Shaboozey and Matty Matheson.
Product expansion beyond denim bottoms remained central to the company’s narrative. Gass said tops grew double digits in Q4, contributing nearly half of revenue growth and higher average unit retails (AURs) versus last year, supported by demand for sweaters, wovens, and outerwear. Within bottoms, she said both core and fashion fits contributed, with loose and baggy styles accelerating. She called out new products including the 578 Baggy for men and the expanding Barrel family for women.
The company also completed the global rollout of its premium Blue Tab collection in Q4. Gass said early consumer response increased confidence in a premium segment opportunity that is “sizable and largely underpenetrated” by Levi’s. In the Q&A, Gass described Blue Tab as the “pinnacle expression” of the brand, with cited price points such as bottoms at $200-$350 and truckers at $250-$400, and said the company plans to expand the assortment and broaden distribution in fiscal 2026 across DTC and select premium wholesale accounts.
DTC growth, store expansion, and AI initiatives
Levi’s DTC business grew 10% in Q4, delivering what management said was its 15th consecutive quarter of positive comps. Gass said the company generated high single-digit comp growth with positive performance across store KPIs including traffic, conversion, units per transaction (UPT), and AUR growth “across every segment.” Levi’s opened 47 net new system stores in Q4, including mainline locations in Japan, India, Thailand, and Korea, as it expands DTC in Asia.
E-commerce grew 22% in Q4, and management discussed new AI-enabled consumer tools. Gass said the company launched “Outfitting,” an AI-powered feature in the Levi’s app designed to create style looks using assortment data, purchase behavior, and product imagery. She also said Levi’s plans to launch a consumer-facing AI stylist chatbot and to scale AI and advanced analytics more broadly, including testing an “integrated agentic AI platform” in partnership with Microsoft that the company expects to roll out to employees this year.
In response to a question about DTC margins, Gass said the company sees “a lot of upside” driven by sales productivity leverage, “retail excellence,” improved assortment planning and lifecycle management, a new planning and allocation system, and a global selling model aimed at operational efficiency and better consumer engagement.
Margins, tariffs, distribution transition, and capital returns
Chief Financial and Growth Officer Harmit Singh said the company ended fiscal 2025 with returns on invested capital of approximately 16%. He added that non-denim categories such as non-denim bottoms, tops, dresses, and skirts contributed to almost a third of the company’s growth in fiscal 2025. Singh said adjusted EBIT margin improved 70 basis points for the year while the company navigated higher tariffs and invested in remapping its distribution network.
For Q4, Singh reported gross margin of 60.8% of net revenues, down 100 basis points from last year, which he attributed primarily to tariffs, partially offset by pricing actions and higher full-price selling. Adjusted SG&A dollars grew 2.6% due to sales upside, higher selling and incentive expenses, higher costs tied to a U.S. distribution transition, and unfavorable foreign exchange. Adjusted EBIT margin declined 100 basis points to 12.1%, which Singh said was related to lapping the 53rd week and tariffs.
Singh also provided an update on the company’s U.S. distribution network transformation. He said the transition to a new third-party distribution center has taken longer than expected, prompting the company to continue operating its own distribution center to meet demand, which has led to higher transitory costs expected to continue through the first half of fiscal 2026. Management cited the successful distribution transition in Europe as a proof point and said it expects to complete the U.S. transition this year.
On inventory, Singh said reported inventory dollars were up 9% year over year and units were up 2%, with the dollar increase primarily driven by tariffs. He said the company believes inventory is “well-positioned” and expects fiscal 2026 ending inventory levels to be below revenue growth.
Levi’s also highlighted capital return activity. Singh said the company returned $55 million to shareholders in Q4 and $363 million for the full year, up 26% versus the prior year. He said this included a 7% dividend increase and $150 million in share repurchases in 2025, which he described as the highest annual buyback since the IPO. The company also announced a $200 million accelerated share repurchase (ASR) program expected to be completed within three months, but no later than six months.
Segment trends and fiscal 2026 outlook
In Q4, Singh said the Americas posted 2% net revenue growth, with U.S. DTC up 6%. U.S. wholesale declined due to capacity constraints in the new third-party logistics setup and a difficult comparison tied to strong growth from a key digital wholesale customer in the prior year. Europe net revenues grew 10%, led by double-digit growth in the U.K. and Germany, and Asia net revenues grew 4%, fueled by strong DTC performance. Singh said Beyond Yoga grew 45% in Q4 and ended the year up 17%.
For fiscal 2026, Levi Strauss guided to organic net revenue growth of 4% to 5%, with 1 point of foreign exchange favorability, resulting in reported revenue growth of 5% to 6%. The company expects:
- Americas revenue growth in the low single digits, Europe mid-single digits, and Asia mid to high single digits.
- DTC growth in the high single digits, supported by positive comps, 50-60 net new system doors, and continued e-commerce growth.
- Wholesale to be flat to slightly up globally, with plans to rationalize certain “non-strategic” U.S. accounts as part of brand elevation.
Singh said gross margin is expected to be flat year over year despite an estimated 150 basis point impact from tariffs and a 20 basis point FX headwind, as the company plans to offset pressures through pricing actions, higher full-price selling, product cost reductions (including lower cotton rates and vendor negotiations), SKU rationalization, and favorable mix. He added that benefits are expected to build through the year, with more meaningful contribution later in fiscal 2026.
Adjusted EBIT margin is expected to expand 40 to 60 basis points to 11.8% to 12%, while marketing spend is expected to remain about 7% of total revenues, though management said spending will be weighted to the first quarter due to a global campaign launching in February with a Super Bowl ad. Full-year adjusted diluted EPS is expected to be $1.40 to $1.46, and CapEx is expected to be about $230 million.
For the first quarter of fiscal 2026, the company expects organic net revenue growth of 4% to 5% with a 3-point FX tailwind (7% to 8% reported). Adjusted EBIT margin is expected to be down 100 basis points to 12% due primarily to the timing of marketing expense, and adjusted EPS is expected to be $0.35 to $0.38.
About Levi Strauss & Co. (NYSE:LEVI)
Levi Strauss & Co is a global apparel company best known for its denim jeans and casual wear. Founded in 1853 in San Francisco by Bavarian immigrant Levi Strauss, the company pioneered the modern blue jean with the introduction of rivet-reinforced work pants. Over its more than 160-year history, Levi Strauss has evolved into a lifestyle brand, offering a broad portfolio that includes denim for men, women and children, as well as tops, outerwear, footwear and accessories.
The company’s flagship label, Levi’s®, is recognized worldwide for its iconic styles such as the 501® Original Fit Jeans, while additional brands, including Dockers®, Target core metric, and Denizen® by Levi’s, cater to diverse price points and consumer segments.
