Levi Strauss & Co (NYSE:LEVI) beat Wall Street estimates for fourth-quarter profit and revenue, helped by continued strength in its direct-to-consumer business, though pressures from tariffs and a sluggish wholesale segment weighed on margins and investor sentiment.
The denim maker reported adjusted earnings of $0.41 per share for the quarter ended November 24, topping analysts’ expectations by $0.02. Revenue came in at $1.77 billion, exceeding estimates by about $90 million, though it fell 2.2% from a year earlier.
Net income for the quarter was $160 million.
Levi’s said its direct-to-consumer (DTC) strategy continued to deliver, with organic DTC revenue growing 10% in the quarter and now accounting for 49% of total revenue. E-commerce sales rose 22%, underscoring the company’s ongoing shift away from its traditional wholesale model.
That transition, however, has not been without friction. Levi’s wholesale business was flat on an organic basis and declined 5% on a reported basis in the quarter, offsetting some of the gains from DTC. Tariffs also pressured profitability, contributing to a 100-basis-point decline in gross margin year over year to 60.8% in the fourth quarter.
For the full fiscal year, Levi’s reported net revenues of $6.3 billion, up 4% from fiscal 2024 and up 7% on an organic basis. Gross margin expanded to 61.7%, an increase of 110 basis points from the prior year, while operating margin improved to 10.8% from 4.4%.
Net income from continuing operations rose to $502 million from $210 million a year earlier. Adjusted net income increased to $537 million from $499 million. Diluted earnings per share from continuing operations came in at $1.26, up from $0.52 in fiscal 2024, while adjusted diluted EPS rose to $1.34 from $1.24.
The company generated $530 million in net cash from operating activities and reported adjusted free cash flow of $308 million.
Looking ahead, Levi’s forecast fiscal 2026 adjusted earnings per share in the range of $1.40 to $1.46, below analysts’ expectations of about $1.48. The company said it expects continued momentum in DTC but flagged ongoing pressure from tariffs, wholesale softness and broader macroeconomic uncertainty.
Shares of Levi Strauss were down more than 5% in morning trading on Thursday.