Levi Strauss shifts to direct-to-consumer model, achieves 7 percent organic growth

US denim giant Levi Strauss & Co. (LS&Co.) has reported a 4 percent increase in reported net revenues to 6.30 billion dollars for the fiscal year ended November 30, 2025. On an organic basis, which excludes the impacts of foreign exchange and divestitures, the group saw a 7 percent rise compared to the prior year.

The company has reached what leadership describes as an inflection point in its transition toward becoming a direct-to-consumer (DTC) led denim lifestyle brand. Under the guidance of president and chief executive officer Michelle Gass, the group has narrowed its operational focus and elevated the core Levi’s brand.

“We have narrowed our focus, improved operational execution and built greater agility across the organization,” Gass stated. She noted that these efforts have resulted in faster growth and higher profitability, positioning the company to define its next chapter.

Fourth quarter performance driven by international growth

For the fourth quarter, net revenues reached 1.80 billion dollars, representing a 1 percent increase on a reported basis and 5 percent organic growth. The results were bolstered by a strong performance in Europe, where revenues rose 10 percent on an organic basis, and Asia, which saw a 4 percent organic increase.

In the Americas, reported net revenues decreased 4 percent, though they rose 2 percent organically. The US market specifically saw a 7 percent decrease on a reported basis, while remaining flat on an organic basis. Beyond Yoga, the group's activewear brand, delivered a significant 37 percent reported revenue increase during the period.

DTC net revenues, a key strategic priority for the firm, grew 8 percent on a reported basis and 10 percent organically. This segment now accounts for 49 percent of total net revenues for the quarter. E-commerce performance was particularly robust, growing 22 percent on an organic basis.

Profitability and margin expansion

The adjusted EBIT margin for the full year reached 11.40 percent, up from 10.70 percent in fiscal year 2024. Gross margin for the year stood at 61.70 percent, an increase of 110 basis points over the previous year.

For the fourth quarter, the adjusted EBIT margin was 12.10 percent compared to 13.90 percent in the prior year. This decline was attributed to the impact of lapping a 53rd week in the previous year and the introduction of tariffs. Net income from continuing operations for the full year rose significantly to 502 million dollars, up from 210 million dollars in FY24.

Strategic divestments and shareholder returns

On July 31, 2025, the company completed the sale of the Dockers intellectual property and operations in the US and Canada. The remaining global operations for Dockers are expected to be divested by February 27, 2026. This move allows the group to concentrate resources on its primary denim and activewear portfolios.

The company increased its capital return to shareholders by 26 percent over the prior year, totaling 363 million dollars. This included 213 million dollars in dividends and 150 million dollars in share repurchases. A new 200 million dollar accelerated share repurchase (ASR) program has also been announced.

Chief financial and growth officer Harmit Singh expressed confidence in the current trajectory. “Our disciplined approach to converting growth into profitability has improved adjusted EBIT margin in 2025 for the third year in a row, and we are on track to expand margins further as we strive toward 15%,” Singh said.

Outlook for fiscal year 2026

LS&Co. has issued guidance for the fiscal year ending November 29, 2026, based on continuing operations. The company expects reported net revenue growth between 5 percent and 6 percent, with organic growth projected at 4 percent to 5 percent.

The adjusted EBIT margin is forecasted to expand further to between 11.80 percent and 12 percent. This guidance assumes that US tariffs on imports from China remain at 30 percent and 20 percent for the rest of the world. Adjusted diluted earnings per share (EPS) are projected to be between 1.40 dollars and 1.46 dollars.