Levi Strauss & Co.

Q2 reported net revenues increased 8% and organic net revenues increased 6%. Adjusted diluted EPS was $0.28, up 27% year over year. Gross margin expanded 10 basis points to 62.7%, and adjusted EBIT margin expanded 70 basis points to 9%; adjusted EBIT dollars grew 18%. Net inventory ended down 7%, and adjusted free cash flow rose nearly 80% year over year to $231 million. For the full year, Levi Strauss raised guidance to reported net revenue growth of 7% to 7.5% and organic growth of 5.5% to 6%, with gross margin expected to expand about 10 basis points, adjusted EBIT margin at 12%, and adjusted EPS at approximately $1.46 to $1.52. Q3 guidance calls for reported and organic revenue growth of 4% to 5%, gross margin around 61.8% plus about 10 bps, EBIT margin of about 11.9%, and EPS of about $0.34 to $0.36.

Michelle Gass said the quarter showed that Levi’s strategy is working, with growth across markets, channels, categories, and consumer segments. She emphasized the company’s shift to a DTC-first lifestyle model, citing strength in brand-led marketing, product innovation, and expansion beyond denim bottoms into tops and other categories. Her tone was confident and upbeat, with repeated comments that the company is still in the “early innings” of a larger opportunity.

Harmit Singh framed Q2 as another proof point for the “profitable growth algorithm,” highlighting 6% organic revenue growth, 62.7% gross margin, 9% adjusted EBIT margin, and $0.28 adjusted EPS. He pointed to lower product costs, pricing actions, disciplined SG&A, and a 7% inventory decline as supports, while noting tariffs and FX as headwinds. He also discussed capital allocation, saying Levi’s targets returning 55% to 65% of free cash flow to shareholders and increased the quarterly dividend by $0.02 to $0.16 per share; adjusted free cash flow was $231 million in the quarter.

Analysts focused on the health of the value consumer, Europe DTC acceleration, the size and mix of growth in Signature, BlueTab’s momentum, and the ERP and U.S. distribution-center transitions. Management said the consumer remains resilient, Signature should accelerate in the back half, and Europe’s underlying demand is healthy with high single-digit H2 prebooks supporting mid-single-digit full-year growth. On BlueTab, management said the brand is gaining traction at the premium end and still has substantial runway, while the ERP rollout is expected to finish by mid-2027 and unlock better data access, AI readiness, and operating visibility.