Levi Strauss & Co.

04/07/2026 | Press release | Distributed by Public on 04/07/2026 14:12

Quarterly Report for Quarter Ending March 1, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report and with our audited financial statements and related notes in our Annual Report on Form 10-K for the year ended November 30, 2025, filed with the Securities and Exchange Commission on January 28, 2026. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" and "Risk Factors" for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements. We use a 52- or 53-week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. References to 2026 and 2025 below in this section are references to our fiscal years ending in November 2026 and November 2025, respectively, unless otherwise indicated. See "Financial Information Presentation - Fiscal Year."
This Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we use certain non-GAAP financial measures throughout this Quarterly Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP financial measures to assist investors in seeing our financial performance from management's point of view and because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with GAAP. For more information on our calculation of non-GAAP measures and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP, see "Non-GAAP Financial Measures."
Overview
We are an iconic American company with a rich history of profitable growth, quality, innovation and corporate citizenship. Our story began in San Francisco, California, in 1853 as a wholesale dry goods business. We created the first riveted blue jean 20 years later. Today we design, market and sell products that include jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets and related accessories for men, women and children around the world under our Levi's®, Levi Strauss Signature™ and Beyond Yoga® brands. We service our consumers through our global infrastructure which develops, sources and markets our products around the world.
We recognize wholesale revenue from sales of our products through third-party retailers such as department stores, specialty retailers, third-party e-commerce sites and franchise locations dedicated to our brands. We also sell our products directly to consumers ("DTC") through a variety of formats, including our own company-operated mainline and outlet stores, company-operated e-commerce sites and select shop-in-shops that we operate within department stores and other third-party retail locations. As of March 1, 2026, our products were sold in approximately 50,000 retail locations in approximately 120 countries, including approximately 3,300 brand-dedicated stores and shop-in-shops. As of March 1, 2026, we had 1,232 company-operated stores located in 38 countries and approximately 520 company-operated shop-in-shops. The remainder of our brand-dedicated stores and shop-in-shops were operated by franchisees and other partners.
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Across all of our brands, pants - including jeans, casual pants, dress pants, shorts, skirts and activewear - represented 67% and 69% of our total units sold in the first three months of 2026 and 2025, respectively. Tops - including shirts, sweaters, jackets, dresses and jumpsuits - represented 29% and 28% of our total units sold in the first three months of 2026 and 2025, respectively. The remainder of our products are accessories. Men's products generated 59% and 61% of our net revenues in the first three months of 2026 and 2025, respectively. Women's products generated 40% and 38% of our net revenues in the first three months of 2026 and 2025, respectively. The remainder of our products are non-gendered. Products other than denim bottoms - which include tops, accessories and pants excluding jeans - represented 37% and 35% of our net revenues in the first three months of 2026 and 2025, respectively.
Our Europe and Asia businesses, collectively, contributed 48% and 46% of our net revenues in the first three months of 2026 and 2025, respectively. Net revenues from our international business, which includes our Europe and Asia segments, as well as Canada and Latin America from our Americas segment, represented 61% and 57% of our net revenues in the first three months of 2026 and 2025, respectively. Sales of Levi's®brand products represented approximately 94% of our net revenues in the first three months of both 2026 and 2025.
Our wholesale channel generated 48% of our net revenues in the first three months of both 2026 and 2025. Sales to franchise partners, included as a component of our wholesale channel, generated 7% of our net revenues in the first three months of both 2026 and 2025. Our DTC channel generated 52% of our net revenues in the first three months of both 2026 and 2025 with our company operated e-commerce business representing 25% and 24% of DTC channel net revenues in the first three months of 2026 and 2025, respectively, and 13% and 12% of total net revenues in the first three months of 2026 and 2025, respectively.
Sale of Dockers®
In the fourth quarter of 2024, the Company announced it had initiated a formal review of strategic alternatives for the Dockers®brand, which could include a potential sale or other strategic transaction. During the second quarter of 2025 the Company entered into a definitive agreement to sell its Dockers®business, subject to customary closing conditions. On July 31, 2025 the Company sold the Dockers®intellectual property and operations in the U.S. and Canada. The Company sold the remaining Dockers®operations in multiple closings during the first quarter of 2026, with the final closing on February 27, 2026. The Dockers®business was reported as discontinued operations in the consolidated statements of income for all periods presented. The current year and prior year metrics included in this Management's Discussion and Analysis exclude the impact of Dockers®.
Other Factors Affecting Our Business
We believe the other key business and marketplace factors that are impacting our business include the following:
•Reciprocal tariffs previously imposed on products imported into the U.S. from most jurisdictions, along with retaliatory actions by other countries, have created an uncertain environment for global trade. On February 20, 2026 a U.S. Supreme Court ruling invalidated the tariffs imposed by the U.S. government under the International Emergency Economic Powers Act ("IEEPA") on products imported into the U.S., which introduced the potential for such previously collected tariffs to be refunded by the U.S. government. Through the first quarter of 2026, the Company paid approximately $80 million of these tariffs. The U.S. government subsequently imposed new tariffs under a separate authority prospectively in response to the ruling, all of which have created additional tariff uncertainty. Many of our products are produced in countries, such as Bangladesh, Cambodia, Pakistan, and Vietnam, that were subject to the recently invalidated U.S. IEEPA tariffs, and are subject to new prospective tariffs. There may be additional tariff actions or increases to existing tariffs in the future in response to the recently invalidated tariffs. As a result of these tariff actions, retaliatory actions taken by other countries in response, and ongoing uncertainty regarding U.S. trade policy, the cost of our inventory in the U.S. has increased and may increase further in the future. These increased costs could lead to a significant increase in cost of sales and a significant reduction in gross margin and income from operations. We are monitoring the changing tariffs and trade restrictions, assessing the impact on our business and taking steps to mitigate their impact. However, the duration, magnitude and scope of any additional tariffs, trade restrictions, and retaliatory or other measures are difficult to predict, including related unfavorable impacts to consumer demand, along with the extent (if any) to which we will be able to offset the impacts of such actions through our mitigation efforts. These tariff actions, retaliatory measures, or other trade restrictions could materially and adversely affect our business.
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•As part of our effort to optimize our logistics network, we are in the process of transitioning and stabilizing the operation of certain of our global distribution and fulfillment centers to third-party logistics providers. This transition from owner-operated facilities to third-party logistics providers has and may continue to cause interruptions to these centers as we transition or restructure systems, technology and employees. We have and may continue to experience shipping delays, order cancellations and increased costs as a result of this transition and stabilization. We are subject to concentration risks and any disruptions, delays or other events impacting the business of the third-party logistics providers may have a significant impact on our business, including our ability to timely fulfill orders. If we continue to encounter problems with our distribution system, our ability to meet customer and consumer expectations, manage inventory, complete sales and achieve operating efficiencies may be adversely affected.
•Macroeconomic pressures in the U.S. and the global economy such as changes in tariff regimes, inflation, energy prices and recession fears are creating a complex and challenging retail environment for us and our customers as consumers may reduce discretionary spending. These trends historically have impacted and may impact our future financial results, affecting revenue, margins and net income.
•As we continue to execute on our strategic framework to be DTC First, we expect to see greater impact on our margins, as the diversification of our business model across channels, geographies, brands, and categories affects our gross margin. For example, if our sales in higher gross margin channels, geographies, brands and categories grow at a faster rate than in our lower gross margin channels, geographies, brands and categories, we would expect a favorable impact to aggregate gross margin over time. Gross margin in our Europe segment is generally higher than in our Americas and Asia segments. DTC sales generally have higher gross margins than sales through third parties, although DTC sales also typically have higher selling expenses and could have lower profitability. Gross margin on tops is generally lower than our bottoms category. Enhancements to our existing product offerings, or our expansion into new brands and products categories, may also impact our future gross margin.
•The current domestic and international political environment, including volatile trade relations and military and civil conflicts, and most recently heightened military action in the Middle East, have resulted in uncertainty surrounding the future state of the global economy. There is greater uncertainty with respect to potential changes in trade regulations, tariffs, sanctions and export controls which also increase volatility in the global economy. This environment has affected and may continue to affect consumer sentiment and demand and production and distribution lead times, increasing our costs and potentially affecting our ability to meet customer demand. If these disruptions persist, they may require us to modify our current sourcing and logistics practices, which may impact our product costs, and, if not mitigated, could have a material adverse effect on our business and results of operations.
•Foreign currencies continue to be volatile, with the volatility increasing due to the imposition of tariffs and evolving trade policies. Significant fluctuations of the U.S. Dollar against various foreign currencies, including the Euro, Mexican peso and Australian dollar, has in the past and may in the future adversely impact our financial results, revenue, operating margins and net income.
•Tax legislation continues to evolve globally with new laws and regulations that create uncertainty and may adversely affect our financial results. The Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework. The Company does not expect the impact of Pillar Two will be significant to our financial results in the short term. Additionally, U.S Congress enacted the One Big Beautiful Bill Act ("OBBBA") which includes significant provisions, including extension of the Tax Cuts and Jobs Act and modifications to the international tax framework. We do not expect the OBBBA to have a material impact to our financial results and we will continue to monitor its impacts as the legislative landscape evolves.
•There has been increased focus from our stakeholders, including consumers, employees, investors, regulatory organizations and legislatures on corporate environmental, social, and governance ("ESG") practices, including corporate practices related to the causes and impacts of climate change and corporate statements, practices or products related to a variety of social issues. We expect that stakeholder expectations and actions with respect to ESG practices and social issues and regulatory requirements will continue to evolve rapidly, which may impact our reputation and financial results.
These factors contribute to a global market environment of intense competition, constant product innovation and continuing cost pressure, and combine with the continuing global economic conditions to create a challenging commercial and economic environment. We evaluate these factors as we develop and execute our strategies.
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For additional information regarding these risks, as well as other risks we face, see the risk factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended November 30, 2025 ("2025 Annual Report on Form 10-K").
Seasonality of Sales
We typically achieve our largest quarterly revenues in the fourth quarter. In fiscal year 2025, our net revenues in the first, second, third and fourth quarters represented 24%, 23%, 25%, 28%, respectively, of our total net revenues for the year.
Our First Quarter 2026 Results
•Net revenues.Consolidated net revenues increased 14.1% on a reported basis and 9.2% on an organic net revenues basis compared to the first quarter of 2025 reflecting net revenue growth across all regions and in both DTC and wholesale channels.
•Net income from continuing operations.We recognized consolidated net income from continuing operations of $177.1 million, compared to $140.2 million in the first quarter of 2025. The increase was primarily driven by higher net revenues and a legal settlement gain, partially offset by higher selling, general and administrative expenses ("SG&A"). Net income margin from continuing operations was 10.2%, up from 9.2% in the first quarter of 2025. Operating margin was 11.4%, down from 12.5% in the first quarter of 2025.
•Adjusted EBIT. Compared to the first quarter of 2025, Adjusted EBIT increased 6.8% to $217.8 million from $204.0 million primarily driven by higher net revenues, partially offset by the impact of tariffs and higher advertising and promotion expense. Adjusted EBIT margin was 12.5%, 90 basis points lower than the first quarter of 2025 on a reported basis, and 140 basis points lower on a constant-currency basis.
•Adjusted net income. Compared to the first quarter of 2025, Adjusted net income increased to $166.7 million from $150.0 million due to higher Adjusted EBIT described above.
•Diluted earnings per share from continuing operations.We recognized diluted earnings per share from continuing operations of $0.45, compared to $0.35 in the first quarter of 2025 mainly due to the higher Net income from continuing operations described above.
•Adjusted diluted earnings per share. Compared to the first quarter of 2025, Adjusted diluted earnings per share increased to $0.42 from $0.38, mainly due to the higher Adjusted net income described above. Currency translation favorably affected Adjusted diluted earnings per share by $0.01.
For more information on Organic net revenues, Adjusted EBIT, Adjusted EBIT margin, Adjusted net income and Adjusted diluted earnings per share, measures not prepared in accordance with GAAP, and reconciliations of such measures to net revenues, net income from continuing operations, net income margin from continuing operations and diluted earnings per share from continuing operations, see "Non-GAAP Financial Measures."
Financial Information Presentation
Fiscal year. We use a 52- or 53- week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. Certain of our foreign subsidiaries have fiscal years ending November 30. Each fiscal year generally consists of four 13-week quarters, with each quarter ending on the Sunday that is closest to the last day of the last month of that quarter. Fiscal year 2026 is a 52-week year, ending on November 29, 2026 and fiscal year 2025 was a 52-week year, ending on November 30, 2025. Each quarter of fiscal years 2026 and 2025 consists of 13 weeks.
Segments. Our Levi's Brands business, which includes Levi's®and Levi Strauss Signature™ brands, is defined by geographical regions into three segments: Americas, Europe and Asia. Our Beyond Yoga®business, which is managed separately, does not meet the quantitative thresholds for reportable segments but is presented separately to increase transparency of our performance.
Classification. Our classification of certain significant revenues and expenses reflects the following:
•Net revenues comprise net sales and licensing revenues. Net sales include sales of products to wholesale customers, including franchised stores, and direct sales to consumers at our company-operated stores and shop-in-shops located within department stores and other third-party locations, as well as company-operated e-commerce sites. Net revenues are recorded net of discounts, allowances for estimated returns and retailer promotions and other incentives. Licensing revenues, which include revenues from the use of our trademarks in connection with the manufacturing, advertising and distribution of trademarked products by third-party licensees, are earned and recognized as products are sold by licensees based on royalty rates as set forth in the applicable licensing agreements.
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•Cost of goods sold primarily comprises product costs, labor and related overhead, sourcing costs, inbound freight, internal transfers and the cost of operating our manufacturing facilities, including the related depreciation expense. On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency.
•Selling expenses reflected in SG&A include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations.
•We reflect substantially all distribution costs in SG&A, for both our DTC and wholesale channels, including costs related to receiving and inspection at distribution centers, warehousing, shipping to our customers, handling, and certain other activities associated with our distribution network.
Discontinued operations. At the end of the first quarter of 2025 the Dockers®business was held for sale and reported as discontinued operations in the consolidated statements of income for all periods presented.
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Results of Operations
The following table summarizes, for the periods indicated, our consolidated statements of income, the changes in these items from period to period and these items expressed as a percentage of net revenues:
Three Months Ended
March 1,
2026 		March 2,
2025 		%
Increase
(Decrease)
March 1,
2026
% of Net
Revenues
March 2,
2025
% of Net
Revenues
(Dollars and shares in millions, except per share amounts)
Net revenues $ 1,742.5 $ 1,526.8 14.1 % 100.0 % 100.0 %
Cost of goods sold 664.2 579.2 14.7 % 38.1 % 37.9 %
Gross profit 1,078.3 947.6 13.8 % 61.9 % 62.1 %
Selling, general and administrative expenses 871.7 749.3 16.3 % 50.0 % 49.1 %
Restructuring charges, net 7.9 6.7 17.9 % 0.5 % 0.4 %
Operating income
198.7 191.6 3.7 % 11.4 % 12.5 %
Interest expense (13.1) (10.9) 20.2 % (0.8) % (0.7) %
Other income (expense), net
42.6 (4.1) * 2.4 % (0.3) %
Income from continuing operations before income taxes
228.2 176.6 29.2 % 13.1 % 11.6 %
Income tax expense 51.1 36.4 40.4 % 2.9 % 2.4 %
Net income from continuing operations
177.1 140.2 26.3 % 10.2 % 9.2 %
Net income (loss) from discontinued operations, net of taxes
(1.3) (5.2) (75.0) % (0.1) % (0.3) %
Net income
$ 175.8 $ 135.0 30.2 % 10.1 % 8.8 %
Earnings (loss) per common share:
Continuing operations - Basic
$ 0.45 $ 0.35 * * *
Discontinued operations - Basic
- (0.01) * * *
Net income - Basic
$ 0.45 $ 0.34 * * *
Continuing operations - Diluted
$ 0.45 $ 0.35 * * *
Discontinued operations - Diluted
- (0.01) * * *
Net income - Diluted
$ 0.45 $ 0.34 * * *
Weighted-average common shares outstanding
(in millions):
Basic 389.9 396.6 (1.7) % * *
Diluted 394.2 400.0 (1.5) % * *
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* Not meaningful
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Net revenues
The following table presents net revenues for the periods indicated and the changes in net revenues on both reported and organic net revenues basis from period to period.
Three Months Ended
% Increase (Decrease)
March 1,
2026 		March 2,
2025 		As
Reported
Organic Net Revenues
(Dollars in millions)
Net revenues:
Levi's Brands:
Americas $ 855.7 $ 783.0 9.3 % 7.1 %
Europe 496.0 400.5 23.8 % 9.8 %
Asia 347.5 308.1 12.8 % 12.4 %
Total Levi's Brands net revenues 1,699.2 1,491.6 13.9 % 8.9 %
Beyond Yoga®
43.3 35.2 23.0 % 23.0 %
Total net revenues $ 1,742.5 $ 1,526.8 14.1 % 9.2 %
Net revenues by channel:
Wholesale $ 831.0 $ 739.3 12.4 % 8.4 %
DTC 911.5 787.5 15.7 % 10.0 %
Total net revenues $ 1,742.5 $ 1,526.8 14.1 % 9.2 %
Levi's Brands net revenues:
Levi's®
$ 1,633.5 $ 1,432.8 14.0 % 8.7 %
Levi Strauss SignatureTM
65.7 56.5 16.3 % 15.9 %
Denizen® (1)
- 2.3 (100.0) % *
Total Levi's Brands net revenues
$ 1,699.2 $ 1,491.6 13.9 % 8.9 %
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(1)The wind down of Denizen®brand operations was substantially complete as of March 2, 2025.
* Not meaningful
Total net revenues increased on both a reported and organic net revenues basis for the three-month period ended March 1, 2026, as compared to the same period in 2025. Currency translation had a favorable impact on total net revenues of approximately $71 million for the three months ended March 1, 2026.
Americas. Currency translation had a favorable impact on net revenues of approximately $18 million for the three months ended March 1, 2026. Net revenues in the Americas increased for the three-month period ended March 1, 2026 on both a reported and organic net revenues basis compared to the prior-year period driven by growth in both DTC and wholesale channels.
The increase in DTC revenues was attributable to growth across all markets, driven primarily by store performance. E-commerce revenues increased primarily due to higher online traffic and higher units per transaction. Wholesale revenues increased primarily due to an increase in average revenues per unit, partially offset by a decrease in volume. DTC and wholesale revenues also benefited from price increases.
Europe. Currency translation had a favorable impact on net revenues of approximately $51 million for the three months ended March 1, 2026. Net revenues in Europe increased for the three-month period ended March 1, 2026 on both a reported and organic net revenues basis compared to the prior-year period, reflecting growth in both wholesale and DTC channels.
Wholesale revenues increased for the three-month period ended March 1, 2026 compared to the prior year period primarily due to higher volumes. Wholesale revenues in the first quarter of 2025 were negatively impacted by decreased shipping in connection with the transition to the distribution center in Dorsten, Germany. The increase in DTC revenues was primarily due to e-commerce revenues and an increase in revenues from outlet stores.
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Asia. Currency translation did not have a significant impact on net revenues for the three months ended March 1, 2026. Net revenues in Asia increased for the three-month period ended March 1, 2026 compared to the prior year period on both a reported and organic net revenues basis and in both our DTC and wholesale channels.
The increase in DTC revenues was primarily due to store performance and expansion in our company-operated stores as a result of increased average revenues per unit and higher volumes. We benefited from 38 more company-operated stores in operation in Asia as of March 1, 2026 as compared to March 2, 2025. The increase in wholesale revenues was primarily due to an increase in units sold.
Beyond Yoga®. Net revenues in Beyond Yoga®increased on a reported and organic net revenues basis for the three-month period ended March 1, 2026 compared to the prior year period, primarily due to growth in e-commerce net revenues reflecting higher demand. Currency translation did not have an impact on net revenues.
Net revenues by channel
Wholesale. Currency translation had a favorable impact on net revenues of approximately $29 million for the three months ended March 1, 2026. Net revenues in our wholesale channel increased for the three-month period ended March 1, 2026 compared with the prior-year period on a reported and organic net revenues basis primarily due to higher volumes, and benefited from price increases. Wholesale revenues in the first quarter of 2025 were negatively impacted by decreased shipping in connection with the transition to the distribution center in Dorsten, Germany.
DTC (Direct to Consumer). Currency translation had a favorable impact on net revenues of approximately $41 million for the three months ended March 1, 2026. Net revenues in our DTC channel increased on both a reported and organic net revenues basis for the three-month period ended March 1, 2026. The increase was driven by store performance and store expansion. E-commerce revenues increased driven primarily by higher traffic, higher units per transaction and higher average revenues per unit. DTC revenues also benefited from price increases. For the three-month period ended March 1, 2026 net revenues from e-commerce on a reported basis grew 21%. As a percentage of net revenues on a reported basis for the three-month period ended March 1, 2026 DTC comprised 52% of total net revenues.
Levi's Brands net revenues
Levi's®.Currency translation had a favorable impact on net revenues of approximately $71 million for the three months ended March 1, 2026. Net revenues for the Levi's®brand increased on both a reported and organic net revenues basis for the three-month period ended March 1, 2026. The increase was a result of higher revenue in our DTC channel, primarily due to store performance and expansion and higher e-commerce traffic, and an increase in wholesale revenues due to higher volumes. Net revenues for the Levi's®brand also benefited from price increases.
Levi Strauss Signature™.Currency translation did not have a significant impact on net revenues for the three months ended March 1, 2026. Net revenues for the Levi Strauss Signature™ brand increased on both a reported and organic net revenues basis for the three months ended March 1, 2026 due to more units sold.
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Gross profit
The following table shows consolidated gross profit and gross margin for the periods indicated and the changes in these items from period to period:
Three Months Ended
March 1,
2026 		March 2,
2025 		%
Increase
(Decrease)
(Dollars in millions)
Net revenues $ 1,742.5 $ 1,526.8 14.1 %
Cost of goods sold 664.2 579.2 14.7 %
Gross profit $ 1,078.3 $ 947.6 13.8 %
Gross margin 61.9 % 62.1 %
Currency translation had a favorable impact on gross profit of approximately $47 million for the three months ended March 1, 2026. For the three-month period ended March 1, 2026, the decrease in gross margin was primarily driven by the impact of tariffs, partially offset by price increases and less promotional activity. Additionally, gross margin increased approximately 30 basis points as a result of currency exchange, including transaction impacts, for the three-month period ended March 1, 2026.
Selling, general and administrative expenses
The following table shows SG&A for the periods indicated, the changes in these items from period to period and these items expressed as a percentage of net revenues:
Three Months Ended
March 1,
2026 		March 2,
2025 		%
Increase
(Decrease) 		March 1,
2026 		March 2,
2025
% of Net
Revenues 		% of Net
Revenues
(Dollars in millions)
Selling $ 383.6 $ 330.1 16.2 % 22.0 % 21.6 %
Advertising and promotion 123.1 83.4 47.6 % 7.1 % 5.5 %
Distribution
123.3 114.8 7.4 % 7.1 % 7.5 %
Other 241.7 221.0 9.4 % 13.9 % 14.5 %
Total SG&A $ 871.7 $ 749.3 16.3 % 50.0 % 49.1 %
Currency translation had an unfavorable impact on SG&A of approximately $30 million for the three months ended March 1, 2026.
Selling. Currency translation had an unfavorable impact on selling expenses of approximately $17 million for the three months ended March 1, 2026. Excluding the effects of currency, selling expenses increased for the three-month period ended March 1, 2026 primarily due to higher DTC store expenses in the current year as compared to the prior-year period, including from store expansion.
Advertising and promotion. Currency translation had an unfavorable impact on advertising and promotion expenses of approximately $3 million for the three months ended March 1, 2026. Excluding the effects of currency, the increase in advertising and promotion expenses was primarily due to increased spending related to the launch of the Behind Every Original campaign, including a commercial during Super Bowl LX which was held at Levi's®Stadium.
Distribution. Currency translation had an unfavorable impact on distribution expenses of approximately $5 million for the three months ended March 1, 2026. Excluding the effects of currency, the increase in distribution expenses was primarily due to increased volume, largely offset by the impact of owned and operated distribution center closures in the prior year.
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Other. Other expenses include functional administrative and organization costs, information resources, and marketing organization costs. Currency translation had an unfavorable impact on other expenses of approximately $4 million for the three months ended March 1, 2026. The increase in other SG&A expenses for the three-month period ended March 1, 2026 includes the impact of attorney fees of $9.8 million related to a gain on legal settlement, partially offset by a decrease in incentive compensation.
Restructuring charges, net
During the three-month period ended March 1, 2026 we recognized restructuring charges of $7.9 million consisting primarily of severance and other post-employment benefit charges in connection with our continuing global productivity initiative. During the three-month period ended March 2, 2025 we recognized restructuring charges of $6.7 million in connection with Project Fuel, a multi-year global productivity initiative that was substantially complete as of November 30, 2025, consisting primarily of severance and other post-employment benefit charges, contract termination costs and asset impairments.
Operating income
The following table shows operating income, restructuring charges and corporate expenses for the periods indicated, the changes in these items from period to period and these items expressed as a percentage of net revenues:
Three Months Ended
March 1,
2026 		March 2,
2025 		%
Increase
(Decrease) 		March 1,
2026 		March 2,
2025
% of Net
Revenues 		% of Net
Revenues
(Dollars in millions)
Operating income:
Levi's Brands:
Americas $ 163.2 $ 169.7 (3.8) % 19.1 % 21.7 %
Europe 129.2 102.4 26.2 % 26.1 % 25.6 %
Asia 70.4 57.9 21.5 % 20.3 % 18.8 %
Total Levi's Brands operating income 362.8 330.0 9.9 % 21.4 % 22.1 %
Beyond Yoga®operating income (loss)
(0.8) (3.1) 73.0 % (1.9) % (8.7) %
Restructuring charges, net (7.9) (6.7) (17.0) % (0.5) % v
 		(0.4) % v
Corporate expenses (155.4) (128.6) (20.8) % (8.9) % v
 		(8.4) % v
Total operating income
$ 198.7 $ 191.6 3.7 % 11.4 % v
 		12.5 % v
Operating margin 11.4 % 12.5 %
______________
vPercentage of consolidated net revenues
Currency translation had a favorable impact on total operating income of approximately $17 million for the three months ended March 1, 2026.
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Levi's Brands operating income.
•Americas. Currency translation had a favorable impact on operating income in the segment of approximately $3 million for the three months ended March 1, 2026. The decrease in operating income for the three-month period ended March 1, 2026 was due to higher SG&A, which increased as a percent of revenue, and lower gross margins, partially offset by higher revenues compared to the prior-year period.
•Europe. Currency translation had a favorable impact on operating income in the segment of approximately $16 million for the three months ended March 1, 2026. Excluding the effects of currency, operating income increased for the three-month period ended March 1, 2026 compared with the prior-year period primarily due to higher revenues and gross margins partially offset by higher SG&A which increased as a percent of revenue.
•Asia. Currency translation did not have a significant impact on operating income in the segment for the three months ended March 1, 2026. Excluding the effects of currency, operating income increased for the three-month period ended March 1, 2026 due to an increase in revenues partially offset by higher SG&A.
Beyond Yoga®operating loss. Currency translation did not have a significant impact on operating income in the segment for the three months ended March 1, 2026. The decrease in operating losses for the three-month period ended March 1, 2026 as compared to the prior year period was due to higher revenues and gross margins, partially offset by higher SG&A.
Restructuring charges, net. Currency translation did not have a significant impact on restructuring charges, net for the three months ended March 1, 2026. During the three-month period ended March 1, 2026 we recognized restructuring charges of $7.9 million consisting primarily of severance and other post-employment benefit charges in connection with our continuing global productivity initiative. During the three-month period ended March 2, 2025 we recognized restructuring charges of $6.7 million in connection with Project Fuel, a multi-year global productivity initiative that was substantially complete as of November 30, 2025, consisting primarily of severance and other post-employment benefit charges, contract termination costs and asset impairments.
Corporate expenses. Corporate expenses represent costs that management does not attribute to any of our operating segments. Included in corporate expenses are other corporate staff costs and costs associated with our global inventory sourcing organization, which are reported as a component of consolidated gross margin. Currency translation did not have a significant impact on corporate expenses for the three months ended March 1, 2026.
The increase in corporate expenses for the three-month period ended March 1, 2026 compared with the prior year period includes the impact of attorney fees related to a gain on legal settlement of $9.8 million and higher global sourcing costs, partially offset by a decrease in incentive compensation.
Interest expense
Interest expense was $13.1 million and $10.9 million for the three-month periods ended March 1, 2026 and March 2, 2025, respectively. Our weighted-average interest rate on average borrowings outstanding during the three-month periods ended March 1, 2026 and March 2, 2025 was 4.67% and 4.23%, respectively.
Other income (expense), net
For the three-month periods ended March 1, 2026 and March 2, 2025, respectively, we recorded other income of $42.6 million and other expense of $4.1 million, respectively. The increase in other income for the three-month period ended March 1, 2026 was primarily due to the recognition of a legal settlement gain of $33.0 million and foreign exchange management gains of $5.6 million, compared to foreign exchange management losses of $10.8 million in the prior year period. This was partially offset by the recognition of foreign currency transaction losses of $5.5 million, compared to transaction gains of $2.2 million in the prior year.
Income tax expense (benefit)
Our effective income tax rate was 22.4% for the three-month period ended March 1, 2026, compared to 20.6% for the same prior-year period. The increase in the effective tax rate in the current quarter was primarily due to a higher effective tax rate on foreign earnings compared with the prior-year period.
Discontinued operations
Discontinued operations consists of the operations of our Dockers®business. See Note 2 to our unaudited consolidated financial statements included in this Quarterly Report for additional information.
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Liquidity and Capital Resources
Liquidity outlook
We believe we will have adequate liquidity over the next 12 months and in the longer term to operate our business and to meet our cash requirements. Over the long term, we plan to deploy capital across all four of our capital allocation priorities: (1) to reinvest 3.5-4% of our revenue in capital, including high growth investment opportunities and initiatives, to grow our business organically, (2) to return capital to our stockholders in the form of cash dividends, with a dividend payout ratio target of 25-35% of net income, (3) to pursue high return on investment acquisitions, both organic and inorganic, that support our current strategies, and (4) to repurchase shares with the goal of offsetting dilution or opportunistic buybacks or both, while maintaining an adequate public float of our shares. Our aim is to return 55-65% of our Adjusted free cash flow to stockholders in the form of dividends and share repurchases. We continue to concentrate our capital investments in new stores, distribution capacity and technology to accelerate the profitable growth of our business. For more information on our calculation of Adjusted free cash flow, a non-GAAP financial measure, see "Non-GAAP Financial Measures."
Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our Board and will depend on then-existing conditions, including our results of operations, payout ratio, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements and other factors that our Board may deem relevant.
Cash sources
We have historically relied primarily on cash flows from operations, borrowings under credit facilities, issuances of notes and other forms of debt financing. We regularly explore financing and debt reduction alternatives, including new credit agreements, unsecured and secured note issuances, equity financing, equipment and real estate financing, securitizations and asset sales.
Our Credit Agreement provides for an asset-based, senior secured revolving credit facility ("Credit Facility"), in which the borrowing availability is primarily based on the value of our U.S. Levi's®trademarks and the levels of accounts receivable and inventory in the U.S. and Canada. The maximum availability under the facility is $1.0 billion, of which $950.0 million is available to us for revolving loans in U.S. Dollars and $50.0 million is available to us for revolving loans either in U.S. Dollars or Canadian Dollars. The facility has an accordion feature which, if exercised, can expand the maximum availability to $1.15 billion.
As of March 1, 2026, we did not have any borrowings under the Credit Facility. Unused availability under the facility was $831.3 million, and our total availability of $850.4 million (based on collateral levels as defined by the agreement less outstanding borrowings under the Credit Facility) was reduced by $19.1 million from other credit-related instruments. We also had cash and cash equivalents totaling approximately $716.6 million and short-term investments of $95.4 million resulting in a total liquidity position (unused availability and cash and cash equivalents and short-term investments) of approximately $1.6 billion. Of our $716.6 million in cash and cash equivalents, approximately $539.6 million was held by foreign subsidiaries.
Cash uses
Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to our pension plans and payments for postretirement health benefit plans, payment of taxes resulting from net settlement of shares issued under our equity incentive plans and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures. In addition, we regularly evaluate our ability to pay dividends or repurchase stock, all consistent with the terms of our debt agreements.
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On January 30, 2026, we entered into an accelerated share repurchase transaction with a third-party financial institution to repurchase an aggregate of $200.0 million of our Class A common stock as part of our share repurchase program (the "ASR Agreement"). At inception, we made an initial payment of $200.0 million and received and immediately retired 7.8 million shares of our Class A common stock, representing 80% of the dollar amount of the transaction based on the January 29, 2026 closing share price. The initial shares received, which had an aggregate cost of $160.0 million, were retired and recorded as a reduction of Retained Earnings, with the remainder of $40.0 million recorded as a reduction of additional paid-in capital. The total number of shares we will ultimately repurchase will be based on the volume-weighted average price per share of our Class A common stock over the term of the ASR Agreement, less an agreed upon discount, and subject to customary adjustments pursuant to the terms and conditions of the ASR Agreement. Final settlement of the transactions under the ASR Agreement is expected to occur no later than the third quarter of 2026. We used a portion of the net proceeds from the sale of Dockers®remaining operations to fund the upfront payment due under the ASR Agreement. See Note 2 to our unaudited consolidated financial statements included in this Quarterly Report for additional information.
In April 2026, a cash dividend of $0.14 per share was declared to holders of record of our Class A and Class B common stock at the close of business on April 22, 2026. The cash dividend will be payable on May 6, 2026, for a total quarterly dividend of approximately $54 million.
Cash flows
The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows:
Three Months Ended
March 1,
2026 		March 2,
2025
(Dollars in millions)
Cash provided by operating activities
$ 211.5 $ 52.5
Cash provided by (used for) investing activities 26.3 (71.1)
Cash used for financing activities
(284.1) (97.5)
Cash and cash equivalents at period end 716.6 574.4
Cash flows from operating activities
Cash provided by operating activities was $211.5 million for the three-month period ended March 1, 2026, as compared to $52.5 million for the comparable period in 2025. The increase in cash provided by operating activities was primarily driven by higher collections of receivables and lower spending on inventory, partially offset by higher spending in SG&A.
Cash flows from investing activities
Cash provided by investing activities was $26.3 million for the three-month period ended March 1, 2026, as compared to cash used for investing activities of $71.1 million for the comparable period in 2025. The increase in net cash provided by investing activities was primarily due to proceeds of $96.3 million from the divestiture of Dockers®international business.
Cash flows from financing activities
Cash used for financing activities was $284.1 million for the three-month period ended March 1, 2026, as compared to $97.5 million for the comparable period in 2025. Cash used in 2026 primarily reflects an accelerated share repurchase of $200.0 million, dividend payments of $53.8 million, and tax withholdings on equity awards of $31.1 million. Cash used in 2025 primarily reflects dividend payments of $51.4 million, common stock repurchases of $30.0 million, and tax withholdings on equity awards of $18.3 million.
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Indebtedness
The borrower of substantially all of our debt is Levi Strauss & Co., the parent and U.S. operating company. Of our total debt of $1.1 billion as of March 1, 2026, 99.9% was fixed-rate debt. As of March 1, 2026, our required aggregate debt principal payments on our unsecured long-term debt were $1.1 billion, with payments starting in 2030. Short-term borrowings of $1.0 million at various foreign subsidiaries are expected to be either paid over the next twelve months or refinanced at the end of their applicable terms.
Our long-term debt agreements contain customary covenants restricting our activities as well as those of our subsidiaries. We were in compliance with all of these covenants as of March 1, 2026.
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Non-GAAP Financial Measures
Adjusted SG&A, Adjusted SG&A Margin, Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Margin, and Adjusted Diluted Earnings per Share
In the table below, we define the following non-GAAP measures. Because the results of our Dockers®business are classified as discontinued operations, those results are not reflected in our non-GAAP measures.
Most comparable GAAP measure Non-GAAP measure Non-GAAP measure definition
Selling, general and administrative expenses ("SG&A")
Adjusted SG&A SG&A expenses excluding goodwill impairment charges and restructuring related charges and other, net
SG&A margin Adjusted SG&A margin Adjusted SG&A as a percentage of net revenues
Net income from continuing operations
Adjusted EBIT
Net income from continuing operations excluding income tax expense, interest expense, other (income) expense, net, goodwill impairment charges, restructuring charges, net, and restructuring related charges and other, net.
Net income margin from continuing operations
Adjusted EBIT margin
Adjusted EBIT as a percentage of net revenues
Net income from continuing operations
Adjusted EBITDA
Adjusted EBIT excluding depreciation and amortization expense
Net income from continuing operations
Adjusted net income
Net income from continuing operations excluding goodwill impairment charges, restructuring charges, net, restructuring related charges and other, net, and gain on legal settlement adjusted to give effect to the income tax impact of such adjustments.
Net income margin from continuing operations
Adjusted net income margin
Adjusted net income as a percentage of net revenues.
Diluted earnings per share from continuing operations
Adjusted diluted earnings per share
Adjusted net income per weighted-average number of diluted common shares outstanding.
We believe Adjusted SG&A, Adjusted SG&A margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted EBITDA, Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share are useful to investors because they help identify underlying trends in our business that could otherwise be masked by certain expenses that we include in calculating net income from continuing operations but that can vary from company to company depending on its financing, capital structure and the method by which its assets were acquired, and can also vary significantly from period to period. Our management also uses Adjusted EBIT in conjunction with other GAAP financial measures for planning purposes, including as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance.
Adjusted SG&A, Adjusted SG&A margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted EBITDA, Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results prepared and presented in accordance with GAAP. Some of these limitations include:
•Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect income tax payments that reduce cash available to us;
•Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness, which reduces cash available to us;
•Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA exclude other income (expense), net, which includes realized and unrealized gains and losses on our forward foreign exchange contracts and transaction gains and losses on our foreign exchange balances, although these items affect the amount and timing of cash available to us when these gains and losses are realized;
•all of these non-GAAP financial measures exclude acquisition and integration charges, impairment charges and early terminations and restructuring charges, net and restructuring related charges, severance and other, net which can affect our current and future cash requirements;
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•all of these non-GAAP financial measures exclude certain other SG&A expense items, which include severance, transaction and deal related costs, including acquisition and integration costs which can affect our current and future cash requirements;
•the expenses and other items that we exclude in our calculations of all of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from all of these non-GAAP financial measures or similarly titled measures;
•Adjusted EBITDA excludes the recurring, non-cash expenses of depreciation of property and equipment and, although these are non-cash expenses, the assets being depreciated may need to be replaced in the future; and
•Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share do not include all of the effects of income taxes and changes in income taxes reflected in net income from continuing operations.
Because of these limitations, all of these non-GAAP financial measures should be considered along with net income from continuing operations and other operating and financial performance measures prepared and presented in accordance with GAAP. The following tables present reconciliations of historic non-GAAP financial measures to their most comparable GAAP financial measure. A reconciliation of forward-looking non-GAAP information to the corresponding GAAP measures cannot be provided without unreasonable efforts due to the challenge in quantifying various items including, but not limited to, the effects of foreign currency fluctuations, taxes and any future restructuring, restructuring-related severance and other charges.
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Adjusted SG&A:
The following table presents a reconciliation of SG&A, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted SG&A for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
(Dollars in millions)
(Unaudited)
Most comparable GAAP measure:
Selling, general and administrative expenses $ 871.7 $ 749.3
Non-GAAP measure:
Selling, general and administrative expenses $ 871.7 $ 749.3
Goodwill impairment charges(1)
- (2.5)
Restructuring related charges and other, net(2)
(11.2) (3.2)
Adjusted SG&A $ 860.5 $ 743.6
SG&A margin 50.0 % 49.1 %
Adjusted SG&A margin 49.4 % 48.7 %
_____________
(1) For the three-month period ended March 2, 2025, goodwill impairment charges includes the recognition of a $2.5 million goodwill impairment charge related to our business in Bolivia.
(2) For the three-month period ended March 1, 2026, restructuring related charges and other, net consists primarily of attorney fees related to a gain on legal settlement of $9.8 million.
For the three-month period ended March 2, 2025, restructuring related charges and other, net primarily relates to consulting costs associated with our restructuring initiative of $2.1 million.
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Adjusted EBIT and Adjusted EBITDA:
The following table presents a reconciliation of net income from continuing operations, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBIT and Adjusted EBITDA for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
(Dollars in millions)
(Unaudited)
Most comparable GAAP measure:
Net income from continuing operations $ 177.1 $ 140.2
Non-GAAP measure:
Net income from continuing operations
$ 177.1 $ 140.2
Income tax expense 51.1 36.4
Interest expense 13.1 10.9
Other (income) expense, net
(42.6) 4.1
Goodwill impairment charges(1)
- 2.5
Restructuring charges, net(2)
7.9 6.7
Restructuring related charges and other, net(3)
11.2 3.2
Adjusted EBIT $ 217.8 $ 204.0
Depreciation and amortization
55.3 49.1
Adjusted EBITDA
$ 273.1 $ 253.1
Net income margin from continuing operations
10.2 % 9.2 %
Adjusted EBIT margin
12.5 % 13.4 %
_____________
(1) For the three-month period ended March 2, 2025, goodwill impairment charges includes the recognition of a $2.5 million goodwill impairment charge related to our business in Bolivia.
(2) For the three-month period ended March 1, 2026, restructuring charges, net consists primarily of severance and post-employment benefit charges.
For the three-month period ended March 2, 2025, restructuring charges, net includes $6.7 million in connection with Project Fuel consisting primarily of severance, post-employment benefit charges, contract terminations and asset impairments.
(3) For the three-month period ended March 1, 2026, restructuring related charges and other, net consists primarily of attorney fees related to a gain on legal settlement of $9.8 million.
For the three-month period ended March 2, 2025, restructuring related charges and other, net primarily relates to consulting costs associated with our restructuring initiative of $2.1 million.
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Adjusted Net Income:
The following table presents a reconciliation of net income from continuing operations, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted net income for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
(Dollars in millions)
(Unaudited)
Most comparable GAAP measure:
Net income from continuing operations
$ 177.1 $ 140.2
Non-GAAP measure:
Net income from continuing operations
$ 177.1 $ 140.2
Goodwill impairment charges(1)
- 2.5
Restructuring charges, net(2)
7.9 6.7
Restructuring related charges and other, net(3)
11.4 3.2
Gain on legal settlement (33.0) -
Tax impact of adjustments(4)
3.3 (2.6)
Adjusted net income
$ 166.7 $ 150.0
Net income margin from continuing operations
10.2 % 9.2 %
Adjusted net income margin
9.6 % 9.8 %
_____________
(1) For the three-month period ended March 2, 2025, goodwill impairment charges includes the recognition of a $2.5 million goodwill impairment charge related to our business in Bolivia.
(2) For the three-month period ended March 1, 2026, restructuring charges, net consists primarily of severance and post-employment benefit charges.
For the three-month period ended March 2, 2025, restructuring charges, net includes $6.7 million in connection with Project Fuel consisting primarily of severance, post-employment benefit charges, contract terminations and asset impairments.
(3) For the three-month period ended March 1, 2026, restructuring related charges and other, net consists primarily of attorney fees related to a gain on legal settlement of $9.8 million.
For the three-month period ended March 2, 2025, restructuring related charges and other, net primarily relates to consulting costs associated with our restructuring initiative of $2.1 million.
(4) Tax impact calculated using the annual effective tax rate, excluding discrete costs and benefits.
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Adjusted Diluted Earnings per Share:
The following table presents a reconciliation of diluted earnings per share from continuing operations, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted diluted earnings per share for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
(Unaudited)
Most comparable GAAP measure:
Diluted earnings per share from continuing operations
$ 0.45 $ 0.35
Non-GAAP measure:
Diluted earnings per share from continuing operations
$ 0.45 $ 0.35
Goodwill impairment charges(1)
- 0.01
Restructuring charges, net(2)
0.02 0.02
Restructuring related charges and other, net(3)
0.02 0.01
Gain on legal settlement (0.08) -
Tax impact of adjustments(4)
0.01 (0.01)
Adjusted diluted earnings per share
$ 0.42 $ 0.38
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(1) For the three-month period ended March 2, 2025, goodwill impairment charges includes the recognition of a $2.5 million goodwill impairment charge related to our business in Bolivia.
(2) For the three-month period ended March 1, 2026, restructuring charges, net consists primarily of severance and post-employment benefit charges.
For the three-month period ended March 2, 2025, restructuring charges, net includes $6.7 million in connection with Project Fuel consisting primarily of severance, post-employment benefit charges, contract terminations and asset impairments.
(3) For the three-month period ended March 1, 2026, restructuring related charges and other, net consists primarily of attorney fees related to a gain on legal settlement of $9.8 million.
For the three-month period ended March 2, 2025, restructuring related charges, severance, and other, net primarily relates to consulting costs associated with our restructuring initiative of $2.1 million.
(4) Tax impact calculated using the annual effective tax rate, excluding discrete costs and benefits.
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Adjusted Free Cash Flow:
Adjusted free cash flow, a non-GAAP financial measure, includes net cash flow from operating activities less purchases of property, plant and equipment from continuing and discontinued operations. This measure therefore includes the results of our Dockers® business, which is classified as discontinued operations. We believe Adjusted free cash flow is an important liquidity measure of the cash that is available after capital expenditures for operational expenses and investment in our business. We believe Adjusted free cash flow is useful to investors because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet, invest in future growth and return capital to stockholders.
Our use of Adjusted free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under GAAP. First, Adjusted free cash flow is not a substitute for net cash flow from operating activities. Second, other companies may calculate Adjusted free cash flow or similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted free cash flow as a tool for comparison. Additionally, the utility of Adjusted free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for a given period. Because of these and other limitations, Adjusted free cash flow should be considered along with net cash flow from operating activities and other comparable financial measures prepared and presented in accordance with GAAP.
The following table presents a reconciliation of net cash flow from operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted free cash flow for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
(Dollars in millions)
(Unaudited)
Most comparable GAAP measure:
Net cash provided by operating activities
$ 211.5 $ 52.5
Net cash provided by (used for) investing activities
26.3 (71.1)
Net cash used for financing activities
(284.1) (97.5)
Non-GAAP measure:
Net cash provided by operating activities
$ 211.5 $ 52.5
Purchases of property, plant and equipment (59.4) (66.6)
Adjusted free cash flow $ 152.1 $ (14.1)
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Organic Net Revenues and Constant-Currency:
We report our net revenues in accordance with GAAP, as well as on an organic net revenues basis in order to facilitate period-to-period comparisons of our revenues which excludes the impact of fluctuating foreign currency exchange rates from the change in reported net revenues, net revenues derived from business acquisitions or divestitures or wind downs impacting the previous comparable reporting period and the estimated impact of any 53rd week. We report our operating results in accordance with GAAP, as well as on a constant-currency basis in order to facilitate period-to-period comparisons of our results without regard to the impact of fluctuating foreign currency exchange rates. These measures exclude the results of our Dockers®business, which is classified as discontinued operations.
The term foreign currency exchange rates refers to the exchange rates we use to translate our operating results for all countries where the functional currency is not the U.S. Dollar into U.S. Dollars. Because we are a global company, foreign currency exchange rates used for translation may have a significant effect on our reported results. In general, our reported financial results are affected positively by a weaker U.S. Dollar and are affected negatively by a stronger U.S. Dollar as compared to the foreign currencies in which we conduct our business. References to our operating results on a constant-currency basis mean our operating results without the impact of foreign currency translation fluctuations.
We calculate constant-currency amounts by translating local currency amounts in the prior-year period at actual foreign currency exchange rates for the current period. Our constant-currency results do not eliminate the transaction currency impact, which primarily includes the realized and unrealized gains and losses recognized from the measurement and remeasurement of purchases and sales of products in a currency other than the functional currency and of forward foreign exchange contracts.
We believe disclosure of organic net revenues and Adjusted EBIT constant-currency, Adjusted EBIT Margin constant-currency and Adjusted Net Income constant-currency results is helpful to investors because it facilitates period-to-period comparisons of our results by increasing the transparency of our underlying performance by excluding the impact of fluctuating foreign currency exchange rates. However, organic net revenues and constant-currency results are non-GAAP financial measures and are not meant to be considered in isolation or as a substitute for comparable measures prepared in accordance with GAAP. Organic net revenues and constant-currency results have no standardized meaning prescribed by GAAP, are not prepared under any comprehensive set of accounting rules or principles and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Organic net revenues and constant-currency results have limitations in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
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Organic Net Revenues:
The table below sets forth the calculation of net revenues by segment on an organic net revenues basis for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025 		% Increase
(Decrease)
(Dollars in millions)
(Unaudited)
Total net revenues(1)
As reported $ 1,742.5 $ 1,526.8 14.1 %
Impact of foreign currency exchange rates - 70.8
Net revenues from Denizen®wind down(2)
- (2.3)
Organic net revenues $ 1,742.5 $ 1,595.3 9.2 %
Americas
As reported $ 855.7 $ 783.0 9.3 %
Impact of foreign currency exchange rates - 18.4
Net revenues from Denizen®wind down(2)
- (2.3)
Organic net revenues - Americas $ 855.7 $ 799.1 7.1 %
Europe
As reported $ 496.0 $ 400.5 23.8 %
Impact of foreign currency exchange rates - 51.3
Organic net revenues - Europe $ 496.0 $ 451.8 9.8 %
Asia
As reported $ 347.5 $ 308.1 12.8 %
Impact of foreign currency exchange rates - 1.1
Organic net revenues - Asia $ 347.5 $ 309.2 12.4 %
Beyond Yoga®
As reported $ 43.3 $ 35.2 23.0 %
Organic net revenues - Beyond Yoga®
$ 43.3 $ 35.2 23.0 %
_____________
(1)
These measures exclude the results of our Dockers®business, which is classified as discontinued operations.
(2)
Foreign currency did not significantly impact net revenues from Denizen®wind down for the three months ended March 2, 2025.
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The table below sets forth the calculation of net revenues by channel on an organic net revenues basis for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025 		% Increase
(Decrease)
(Dollars in millions)
(Unaudited)
Total net revenues(1)
As reported $ 1,742.5 $ 1,526.8 14.1 %
Impact of foreign currency exchange rates - 70.8
Net revenues from Denizen®wind down(2)
- (2.3)
Organic net revenues $ 1,742.5 $ 1,595.3 9.2 %
Wholesale
As reported $ 831.0 $ 739.3 12.4 %
Impact of foreign currency exchange rates - 29.5
Net revenues from Denizen®wind down(2)
- (2.3)
Organic net revenues - Wholesale
$ 831.0 $ 766.5 8.4 %
DTC
As reported $ 911.5 $ 787.5 15.7 %
Impact of foreign currency exchange rates - 41.3
Organic net revenues - DTC
$ 911.5 $ 828.8 10.0 %
_____________
(1)
These measures exclude the results of our Dockers®business, which is classified as discontinued operations.
(2)
Foreign currency did not significantly impact net revenues from Denizen®wind down for the three months ended March 2, 2025.
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The table below sets forth the calculation of net revenues by brand on an organic net revenues basis for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025 		% Increase
(Decrease)
(Dollars in millions)
(Unaudited)
Total Levi's Brands net revenues
As reported $ 1,699.2 $ 1,491.6 13.9 %
Impact of foreign currency exchange rates - 70.8
Net revenues from Denizen®wind down(1)
- (2.3)
Organic net revenues $ 1,699.2 $ 1,560.1 8.9 %
Levi's®
As reported $ 1,633.5 $ 1,432.8 14.0 %
Impact of foreign currency exchange rates - 70.6
Organic net revenues - Levi's®
$ 1,633.5 $ 1,503.4 8.7 %
Levi Strauss SignatureTM
As reported $ 65.7 $ 56.5 16.3 %
Impact of foreign currency exchange rates
- 0.2
Organic net revenues - Levi Strauss SignatureTM
$ 65.7 $ 56.7 15.9 %
Denizen®
As reported $ - $ 2.3 (100.0) %
Impact of foreign currency exchange rates
- -
Net revenues from Denizen®wind down(1)
- (2.3)
Organic net revenues - Denizen®
$ - $ - *
_____________
(1)
Foreign currency did not significantly impact net revenues from Denizen®wind down for the three months ended March 2, 2025.
* Not meaningful
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Constant-Currency Adjusted EBIT and Constant-Currency Adjusted EBIT margin:
The table below sets forth the calculation of Adjusted EBIT and Adjusted EBIT margin on a constant-currency basis for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
%
Increase
(Decrease)
(Dollars in millions)
(Unaudited)
Adjusted EBIT(1)
$ 217.8 $ 204.0 6.8 %
Impact of foreign currency exchange rates - 17.3 *
Constant-currency Adjusted EBIT
$ 217.8 $ 221.3 (1.6) %
Adjusted EBIT margin
12.5 % 13.4 % (6.7) %
Impact of foreign currency exchange rates - % 0.5 % *
Constant-currency Adjusted EBIT margin(2)
12.5 % 13.9 % (10.1) %
_____________
(1)
Adjusted EBIT is reconciled from net income from continuing operations which is the most comparable GAAP measure. Refer to Adjusted EBIT and Adjusted EBITDA table for more information.
(2)
We define constant-currency Adjusted EBIT margin as constant-currency Adjusted EBIT as a percentage of constant-currency net revenues from continuing operations.
* Not meaningful
Constant-Currency Adjusted Net Income and Constant-Currency Adjusted Diluted Earnings per Share:
The table below sets forth the calculation of Adjusted net income and Adjusted diluted earnings per share on a constant-currency basis for each of the periods presented.
Three Months Ended
March 1,
2026 		March 2,
2025
%
Increase
(Decrease)
(Dollars in millions, except per share amounts)
(Unaudited)
Adjusted net income(1)
$ 166.7 $ 150.0 11.1 %
Impact of foreign currency exchange rates - 6.0 *
Constant-currency Adjusted net income
$ 166.7 $ 156.0 6.9 %
Constant-currency Adjusted net income margin(2)
9.6 % 9.8 %
Adjusted diluted earnings per share
$ 0.42 $ 0.38 10.5 %
Impact of foreign currency exchange rates - 0.01 *
Constant-currency Adjusted diluted earnings per share
$ 0.42 $ 0.39 7.7 %
_____________
(1)
Adjusted net income is reconciled from net income from continuing operations which is the most comparable GAAP measure. Refer to Adjusted net income table for more information.
(2)
We define constant-currency Adjusted net income margin as constant-currency Adjusted net income as a percentage of constant-currency net revenues from continuing operations.
* Not meaningful
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Off-Balance Sheet Arrangements, Guarantees and Other Contingent Obligations
As of March 1, 2026, there had been no significant changes to our off-balance sheet arrangements or contractual commitments from those disclosed in our 2025 Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes. There have been no significant changes to our critical accounting policies from those disclosed in our 2025 Annual Report on Form 10-K.
Recently Issued Accounting Standards
See Note 1 to our unaudited consolidated financial statements included in this Quarterly Report for recently issued accounting standards, including the expected dates of adoption and expected impact to our consolidated financial statements upon adoption.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Quarterly Report, including (without limitation) statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.
These forward-looking statements include statements relating to our anticipated financial performance and business prospects, including debt reduction, currency values and financial impact and foreign exchange counterparty exposures, statements regarding our business strategy and other plans and objectives for our future operations, statements concerning the impacts of macroeconomic conditions and tariffs, statements relating to the impact of pending legal proceedings, adequate liquidity levels, dividends, share repurchases or other capital deployment initiatives and/or statements preceded by, followed by or that include the words "believe", "will", "will be", "will continue", "will likely result", "may", "predicts", "so we can", "when", "anticipate", "intend", "estimate", "expect", "project", "aim", "could", "plans", "seeks" and similar expressions. These forward-looking statements speak only as of the date stated, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed in Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the fiscal year ended November 30, 2025, and in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:
•changes in general economic and financial conditions, inflationary pressures, tariff regimes, including ongoing uncertainty around newly imposed U.S. tariffs and any additional responsive non-U.S. tariffs or additional U.S. tariffs, and the resulting impact on the level of discretionary consumer spending for apparel and pricing trend fluctuations, and our ability to plan for and respond to the impact of those changes;
•potential increases in import tariffs or taxes, impacts from already implemented or announced tariffs, including newly imposed U.S. tariffs and any additional responsive non-U.S. tariffs or additional U.S. tariffs, and the implementation of trade restrictions or sanctions;
•the Russia-Ukraine war, escalating conflicts in the Middle East, and the potential impacts of these and other conflicts on global economic and geopolitical conditions, in particular energy prices;
•the risk of future non-cash asset impairment charges, including to goodwill, operating right-of-use assets and/or other store assets;
•our ability to execute on our business strategies, including our focus on elevating and strengthening our brand, the portion of our net revenues we aim to have represented by our direct-to-consumer business, our digital presence and growth into under-penetrated parts of our business, our expectations regarding gross and Adjusted EBIT margins, and our plans and expectations for the benefits of investments in operational excellence including steps to improve our speed-to-market;
•our ability to effectively manage any global productivity and outsourcing actions as planned, which are intended to increase productivity and efficiency in our global operations, take advantage of lower-cost service-delivery models in our distribution network and streamline our procurement practices to maximize efficiency in our global operations, without business disruption or mitigation to such disruptions;
•our ability to effectively manage our inventory and supply chain, the ability of business partners, including global third party logistics providers, to meet their obligations to us, and operational challenges faced by our warehouses and distribution centers;
•consequences of impacts to the businesses of our wholesale customers, including significant store closures or a significant decline in a wholesale customer's financial condition leading to restructuring actions, bankruptcies, liquidations or other unfavorable events for our wholesale customers, caused by factors such as, among other things, inability to secure financing, decreased discretionary consumer spending, inconsistent foot and online traffic patterns and an increase in promotional activity as a result of decreased foot and online traffic, pricing fluctuations, general economic and financial conditions and changing consumer preferences;
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•our ability to execute on our commitment to increasing total shareholder returns through our capital allocation priorities and strategies;
•our ability to achieve anticipated operating model optimization, simplified processes and cost savings from our global productivity initiative;
•our and our wholesale customers' decisions to modify strategies and adjust product mix and pricing, and our ability to manage any resulting product transition costs, including liquidating inventory or increasing promotional activity;
•our ability to purchase products through our independent contract manufacturers that are made with quality raw materials and our ability to mitigate the variability of costs related to manufacturing, sourcing, and raw materials supply and to manage consumer response to such mitigating actions;
•our ability to gauge and adapt to changing U.S. and international retail environments and fashion trends and changing consumer preferences in product, price-points, as well as in-store and digital shopping experiences;
•our ability to respond to price, innovation and other competitive pressures in the global apparel industry, on and from our key customers and in our key markets and to increasing consumer expectations;
•our ability to increase the number of dedicated stores for our products, including through opening and profitably operating company-operated stores;
•our future business expectations, products, strategies, and goals, including our future financial, strategic, and operating performance and our long-term goals and targets;
•the extent to which wholesale customer forward demand signals result in actual sales;
•consequences of inflation, foreign currency exchange and interest rate fluctuations;
•the impact of foreign currency and exchange counterparty exposures;
•the impact of the effects of global supply chain disruptions on our business;
•increases in the price or availability of raw materials;
•the impact on our consumer traffic and demand, our business operations and the operations of our suppliers and manufacturers as climate change evolves and the frequency and severity of weather events increase;
•the impact of seasonality of our sales and our business;
•our ability to successfully prevent or mitigate the impacts of data security breaches;
•our ability to attract and retain key executives and other key employees;
•our ability to achieve our diversity, equity and inclusion, ESG and sustainability and climate change goals;
•our ability to protect our trademarks and other intellectual property;
•the impact of the variables that affect the net periodic benefit cost and future funding requirements of our postretirement benefits and pension plans;
•our dependence on key distribution channels, customers and suppliers;
•our ability to utilize our tax credits and net operating loss carryforwards;
•potential future paydowns of existing debt;
•future acquisitions of or investments in new businesses;
•planned dispositions and their expected impact;
•the adequacy of our liquidity position;
•the process and risks relating to the implementation of a new ERP system;
•the impact of pending, ongoing or future legal proceedings, litigation matters and disputes and regulatory developments;
•the impact of future shareholder returns, including share repurchases and dividends;
•changes in or application of trade and tax laws and policies; and
•political, social and economic instability, or natural disasters, in countries where we or our customers do business.
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We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions and other factors described under Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the fiscal year ended November 30, 2025, in our other filings with the SEC and in this Quarterly Report. These risks are not exhaustive. Other sections of this Quarterly Report include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
The forward-looking statements made in this Quarterly Report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report or to conform such statements to actual results or revised expectations, except as required by law.
Additional information regarding factors that could cause results to differ can be found in our Annual Report on Form 10-K for the fiscal year ended November 30, 2025, in this Quarterly Report and our other filings with the U.S. Securities and Exchange Commission. We suggest that this document be read in conjunction with our other filings with the U.S. Securities and Exchange Commission.
As used herein, "Levi Strauss", "Levi", "Levi's", "the company", "the Company", "we", "us", "our" and similar terms include Levi Strauss & Co. and its subsidiaries, unless the context indicates otherwise.
Levi Strauss & Co. published this content on April 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 07, 2026 at 20:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]