Levi Strauss & Co. delivered strong second-quarter results that exceeded analyst expectations, with adjusted earnings per share of $0.28 beating the FactSet estimate of $0.24 for the quarter ended May 31. The San Francisco-based denim maker also raised its fiscal 2026 net revenue forecast to 7.0% to 7.5% growth from its previous projection of 5.5% to 6.5%, while increasing its adjusted earnings per share forecast to $1.46 to $1.52 compared with the prior range of $1.42 to $1.48. This represents a slight miss against analyst expectations of $1.50 per share, contributing to the market's cautious reaction to the results. Despite the positive earnings beat, shares fell 5% in extended trading as the company's full-year profit outlook showed mixed signals. The company's 2025 net revenues were $6.3 billion, with the latest quarterly results demonstrating continued momentum in the denim market.
CEO Michelle Gass highlighted the company's successful premium denim strategy, stating that Levi's still had an opportunity to capture a 'sizable premium segment' it has not yet fully tapped. The company is expanding its $300 jeans line to more stores this year as it seeks to tap demand for premium denim, with Gass noting that the premium Blue Tab denim line was still in its early stages but gaining traction. The strategy focuses on baggy styles that have proved popular with affluent Gen Z shoppers, while the company is also seeing strong demand for loose silhouettes and newer products such as button-down shirts and sweaters. Women's clothing sales were especially strong during the quarter, reflecting the company's diversification beyond traditional denim. The company's direct-to-consumer business, which accounts for half of total sales, continues to face a significant challenge in attracting higher-income consumers, with this group of shoppers having cut back on discretionary spending as gas and grocery bills have mounted.
Regional performance varied significantly across markets, with sales in the Americas rising 9% in the quarter, while Asia posted a 12% increase. However, European sales slowed dramatically, rising only 4% compared to the first quarter and year-over-year, marking a significant deceleration from previous performance. This regional divergence reflects the company's exposure to different economic conditions and consumer spending patterns across its key markets. Despite the strong Americas performance, Gass acknowledged that the company was 'mindful of the external environment' and noted that shoppers across income cohorts had shown resilience in their spending, though discretionary spending has been impacted by rising gas and grocery bills. The company's global footprint includes approximately 3,300 retail stores and shop-in-shops across approximately 120 countries worldwide.
The company's direct-to-consumer business delivered 8% revenue growth and 6% comparable sales growth in Q2, marking its 17th consecutive quarter of comp growth. The global e-commerce channel surged 17%, driven by increased traffic, better conversion rates, and higher average unit prices as the company reduced promotional activity. The company welcomed 3 million new members to its loyalty program, bringing global membership to nearly 50 million, with continued efforts to enhance personalized experiences and leverage data for more relevant customer interactions. International markets demonstrated strong momentum with 6% revenue growth, led by double-digit gains in Asia and Latin America, while the women's business grew 11% in the quarter. The company's global wholesale business increased 3%, with particular strength in the U.S. wholesale channel, as retail partners increasingly leaned into the company's diversified lifestyle assortment. The company's direct-to-consumer-first business model is delivering higher margins with DTC EBIT up 400bps year-to-date, providing greater control over brand experience and faster innovation cycles.
