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LEVI STRAUSS & CO (LEVI)·Q3 2025 Earnings Summary

Executive Summary

  • LEVI delivered a clean beat in Q3 2025: net revenues $1.54B (+7% YoY), gross margin 61.7% (+110 bps YoY), adjusted EBIT margin 11.8% and adjusted EPS $0.34, all above guidance; diluted EPS from continuing ops was $0.31 .
  • Broad-based strength across channels and regions: DTC +11% (e-commerce +18%), wholesale +3%; Americas +6% reported (+7% organic), Europe +5% reported (+3% organic), Asia +12% reported .
  • FY25 guidance raised: reported revenue growth to ~3% (from 1–2%), organic growth to ~6% (from 4.5–5.5%), gross margin expansion to +100 bps (from +80 bps), adjusted EPS to $1.27–$1.32 (from $1.25–$1.30); EBIT margin maintained at 11.4–11.6% and tax ~23% .
  • Catalysts: sustained DTC-first execution, women/tops momentum, Asia acceleration, and premiumization (Blue Tab) alongside tariff mitigation; mgmt guided Q4 gross margin contraction (~100 bps) due to tariffs and 53rd week lap but expects adjusted EBIT margin 12.4–12.6% .

What Went Well and What Went Wrong

  • What Went Well
    • DTC momentum and profitability: “Global direct-to-consumer sales were up 9%… more than 400 basis points of margin expansion in the quarter” .
    • Broad-based growth and mix tailwinds: “Record gross margin of 61.7%… expanding 110 basis points… offsetting 80 bps tariff headwind,” driven by DTC/international/women mix and pricing/full-price sell-through .
    • Confidence in trajectory: “We are raising our full-year outlook… well-positioned for the holiday season” .
  • What Went Wrong
    • SG&A step-up: Adjusted SG&A up ~10.5% YoY to $769M; Adjusted SG&A rate 49.8% given performance comp, store openings, and DC transformation costs .
    • Tariff headwinds: Updated assumptions (US imports from China 30%, RoW ~20%) create an ~80 bps gross margin headwind in Q4 and ~$0.03 EPS impact, despite mitigation .
    • Q4 caution: Guidance flags GM contraction (~100 bps) and reported revenue down ~3% due to the 53rd week/portfolio exits despite solid organic trends .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.44 $1.53 $1.45 $1.54
Gross Margin %60.6% 62.1% 62.6% 61.7%
Operating Margin %2.3% 12.5% 7.5% 10.8%
Adjusted EBIT Margin %12.3% 13.4% 8.3% 11.8%
Diluted EPS – Cont. Ops ($)$0.06 $0.35 $0.20 $0.31
Adjusted Diluted EPS ($)$0.33 $0.38 $0.22 $0.34
DTC Mix of Revenue (%)—52% 50% 46%
Actuals vs SPGI ConsensusQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.53 vs $1.54* (miss) $1.45 vs $1.37* (beat) $1.54 vs $1.50* (beat)
Primary EPS ($)$0.38 vs $0.278* (beat) $0.22 vs $0.135* (beat) $0.34 vs $0.306* (beat)
# of EPS Estimates12*12*13*
# of Revenue Estimates10*10*11*

Values with asterisks retrieved from S&P Global.

Segment performance (Q3 2025):

SegmentNet Revenues ($MM)YoY % ReportedYoY % OrganicOperating Income ($MM)YoY % Reported
Americas$806 6% 7% $189 9%
Europe$426 5% 3% $91 9%
Asia$278 12% 12% $33 17%
Beyond Yoga$33 2% 2% $(5) 17%

KPIs (Q3 2025):

KPIQ1 2025Q2 2025Q3 2025
DTC Net Revenues Growth (Reported/Organic)+9% / +12% +11% / +10% +11% / +9%
E-commerce Net Revenues Growth (Reported/Organic)+13% / +16% +13% / +13% +18% / +16%
Wholesale Net Revenues Growth (Reported/Organic)(3)% / +5% +3% / +7% +3% / +5%
Inventories YoY+7% +15% +12%
LATAM growth (Americas subregion)——+23%

Guidance Changes

MetricPeriodPrevious Guidance (Q2 release)Current Guidance (Q3 release)Change
Reported Net Revenue GrowthFY 20251%–2% ~3% Raised
Organic Net Revenue GrowthFY 20254.5%–5.5% ~6% Raised
Gross Margin ExpansionFY 2025+80 bps (after tariffs) +100 bps (after tariffs) Raised
Adjusted EBIT MarginFY 202511.4%–11.6% 11.4%–11.6% Maintained
Tax RateFY 2025~23% ~23% Maintained
Adjusted Diluted EPSFY 2025$1.25–$1.30 $1.27–$1.32 Raised
Tariff AssumptionsFY 2025US: China 30%, RoW 10% US: China 30%, RoW ~20% Updated higher RoW

Dividend declared for Q4: $0.14 per share, payable Nov 4, 2025 .

Earnings Call Themes & Trends

TopicQ1 2025 (Apr 7)Q2 2025 (Jul 10)Q3 2025 (Oct 9)Trend
DTC margin expansionDTC EBIT margin +500 bps; e-com profitable DTC EBIT +300 bps Q2; +400 bps YTD DTC margin expansion >400 bps; comps high-single digit Strengthening
Supply chain/DC transformationHybrid 3PL; SG&A up from distribution costs Europe DC transition benefits wholesale; US running parallel DCs US parallel DCs to ramp down by early Q1 2026 Transitioning
TariffsFluid; task force; 28-country sourcing agility Assumes 30% CN, 10% RoW; net GM impact ~20 bps FY Updates RoW ~20%; Q4 GM −100 bps; EPS −$0.03 Headwind, mitigated
Product performanceWomen +12%; tops +7%; bottoms +9% Women +13%; tops +15–16%; Blue Tab launch Levi’s women +9; tops +9; men +5; premiumization expands Positive
Regional trendsEurope +3% (org +3%); Asia +10%; US +8% Europe +15%; US +7%; LATAM +18% Europe +3%; Asia +12%; US +3% org; LATAM +23% Mixed; Asia accelerates
Regulatory/legal & restructuringProject Fuel charges; SG&A reconciliation SG&A leverage; restructuring charges detailed Restructuring charges $9M; SG&A adj detail; legal settlements Ongoing optimization
Sustainability/ESG——Unveiled 2030 Water Strategy (Oct 23) Strengthening focus

Management Commentary

  • “We delivered another very strong quarter… driving a meaningful inflection in our financial performance… we are raising our full-year outlook” — Michelle Gass, President & CEO .
  • “Strong financial performance exceeding expectations across… gross margin, adjusted EBIT margin and adjusted diluted EPS… raising our full-year revenue and adjusted diluted EPS expectations” — Harmit Singh, CFO & Growth Officer .
  • “Record gross margin of 61.7%… expanding 110 bps versus the prior year, more than offsetting 80 bps of tariff headwind” — Harmit Singh .
  • “Global direct-to-consumer sales were up 9%… we generated high single-digit comp growth… more than 400 basis points of margin expansion” — Michelle Gass .

Q&A Highlights

  • Europe outlook and Q4 mechanics: Europe accelerated exiting Q3; Q4 GM down ~100 bps on tariffs/53rd week lap, adjusted EBIT margin guided 12.4–12.6% .
  • SG&A and distribution costs: SG&A rate below 50% in Q3; distribution expenses elevated due to parallel DCs; plan to ramp down parallel DCs by early Q1 2026 .
  • Pricing actions: Took targeted sell-in pricing in Q3 with no observable demand impact; leveraging premium tiers (Blue Tab) and promo optimization as tariff mitigation .
  • Wholesale dynamics: Growth largely with existing accounts and strong sell-through, with Western wear expansion (Boot Barn, Cavender’s); US wholesale expected down in Q4 on strong lap/53rd week .

Estimates Context

  • Across Q1–Q3, LEVI beat EPS consensus each quarter, with the largest beat in Q1 (+$0.10 vs consensus); revenues beat in Q2 and Q3, while Q1 revenue was modestly below consensus.
  • Given raised FY guidance and sustained mix tailwinds, sell-side models likely need higher gross margin and EPS assumptions for FY25, while Q4 margins must reflect the tariff and calendar headwinds .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • DTC-first strategy is translating into sustained margin expansion and higher-quality revenue; expect DTC mix and women/tops to continue underpinning gross margin resilience .
  • Tariff headwinds are real but manageable; mgmt has credible mitigation levers (pricing, promo, vendor negotiation, supply chain diversification) and raised FY guidance despite higher RoW tariffs .
  • Asia and LATAM momentum, plus premiumization (Blue Tab), support medium-term growth and AUR gains; Europe remains steady with improving wholesale post-DC transition .
  • Near-term watch items: Q4 GM contraction on tariffs/53rd week and US wholesale lap; inventory up 12% to support holiday, with 70% of US holiday product already in place .
  • Capital returns remain robust (ASR $120M, Q4 dividend $0.14), with $440M remaining buyback authorization and liquidity ~$1.5B enhancing flexibility .
  • Structural EBIT progression toward 15% remains a stated ambition; building blocks are gross margin expansion and SG&A leverage, aided by DTC productivity and SKU/assortment rigor .

Additional Relevant Press Releases (Q3 2025 period)

  • Beyoncé and Levi’s launch “The Denim Cowboy,” the final chapter of the REIIMAGINE campaign, reinforcing Levi’s brand heat and women’s focus .
  • LEVI participation at Goldman Sachs Global Retailing Conference (Sept 3) .
  • Post-quarter ESG update: 2030 Water Strategy “Beyond the Blue” to build supply chain and community resilience .