Levi Strauss & Co. — Form 10-Q Summary
Reporting period: Quarter and nine months ended August 30, 2026. Comparisons are with the periods ended August 31, 2025. Results are unaudited. Levi Strauss designs, markets and sells apparel globally under the Levi’s, Levi Strauss Signature and Beyond Yoga brands. Dockers was sold, with the final closing on February 27, 2026, and is reported as discontinued operations.
Financial performance
| Metric | Third quarter 2026 | Nine months 2026 |
|---|---|---|
| Net revenues | $1,609.7 million, up 4.3% reported and 4.5% organic | $4,914.2 million, up 8.8% reported and 6.5% organic |
| Gross profit / margin | $1,065.8 million / 66.2%, versus 61.7% | $3,123.2 million / 63.6%, versus 62.1% |
| Operating income / margin | $222.3 million / 13.8%, versus $167.4 million / 10.8% | $543.2 million / 11.1%, versus $467.0 million / 10.3% |
| Continuing-operations net income | $168.6 million, up 38.2% | $440.5 million, up 28.9% |
| Continuing-operations diluted EPS | $0.43, versus $0.31 | $1.12, versus $0.86 |
| Adjusted EBIT (non-GAAP) | $248.7 million; 15.5% margin | $607.7 million; 12.4% margin |
| Operating cash flow / capital expenditures | Quarterly operating cash flow was $102.9 million; capex detail not separately stated here | $585.2 million / $157.9 million |
Cash and liquidity: Cash and cash equivalents were $641.4 million and short-term investments were $137.9 million at quarter-end. Including $696.7 million of unused revolving credit availability, reported total liquidity was approximately $1.5 billion. Cash declined from $757.9 million at November 30, 2025. Nine-month adjusted free cash flow, a non-GAAP measure, was $427.3 million, versus $92.5 million.
Debt: Long-term debt was $1,043.6 million, consisting of fixed-rate senior notes due 2030 and 2031. The company had no revolving-credit borrowings, and reported $696.7 million of unused availability. It stated that it was in compliance with debt covenants.
Changes and key drivers
- Third-quarter revenue growth reflected wholesale growth and DTC growth in Asia. For the first nine months, revenue increased across regions and both wholesale and DTC channels.
- Reported third-quarter gross margin benefited from $78.6 million of IEEPA tariff refunds, which management said added 490 basis points to operating-margin expansion. The nine-month results included $80.7 million of tariff-refund benefit, adding 170 basis points to operating-margin expansion. These are material, potentially non-recurring benefits.
- SG&A increased 7.8% in the quarter and 10.2% year to date, reflecting higher store costs, advertising, distribution, technology and restructuring-related costs.
- Net income for the quarter was $168.6 million, below prior-year total net income of $218.1 million because the prior-year comparison included $96.1 million of Dockers discontinued-operations income, largely a sale gain. Nine-month 2026 net income was $431.7 million, including an $8.8 million discontinued-operations loss, compared with $420.1 million in 2025.
- Year-to-date other income included a $33.0 million legal-settlement gain. The company also recorded $4.7 million of interest income associated with tariff refunds.
Outlook, risks and other notable matters
- The filing gives no specific full-year 2026 revenue or earnings guidance. Management said it expects adequate liquidity over the next 12 months and longer term. Capital-allocation priorities include investing 3.5%–4% of revenue, targeting a 25%–35% dividend payout ratio, and aiming to return 55%–65% of adjusted free cash flow through dividends and repurchases.
- Trade policy remains uncertain. New Section 301 tariffs and possible further tariff actions could increase inventory costs and pressure gross margin and operating income; management is assessing and seeking to mitigate the effects.
- Management cited macroeconomic and geopolitical uncertainty, consumer-demand and foreign-exchange risks, and potential supply-chain disruption. The transition of certain distribution and fulfillment centers to third-party providers may cause delays, cancellations or higher costs. A distribution-center fire affected operations but was insured and did not have a significant financial impact.
- Restructuring charges were $29.0 million year to date, with an additional $19.6 million of restructuring-related costs recorded in SG&A. Initiatives include cost reductions, global shared services and distribution-network changes.
- Beyond Yoga goodwill fair value exceeded carrying value but was less than 10% above it, indicating sensitivity to assumptions and potential future impairment risk.
- The company said ordinary-course litigation and customs-duty matters were not expected to have a material effect. It recorded $78.6 million of tariff refunds in the quarter; $57.1 million had been received by quarter-end, with the remainder recorded as a receivable. Further recovery remains under assessment.
- A $0.16-per-share quarterly dividend was declared after quarter-end, payable November 4, 2026. The company has no established dividend policy; future dividends remain at the board’s discretion.
Most important facts for investors to verify
- How much reported margin and earnings growth depends on tariff refunds, and whether further refunds will be realized.
- Whether revenue and profitability growth can continue without one-time tariff-refund and legal-settlement benefits, given rising SG&A.
- Progress and costs associated with distribution-center transitions, third-party logistics providers and the stated operational disruptions.
- Current and future tariff exposure, mitigation effectiveness, and the impact on product costs, consumer demand and margins.
- Cash conversion, working-capital trends and capital returns after the $200 million accelerated share repurchase and ongoing dividends.
- Beyond Yoga performance and valuation assumptions, as well as any impairment indicators.