Levi Strauss Q2 FY2026 Earnings: $1.56 Billion Revenue (+8%), Adjusted EPS +27% and Raised Full-Year Guidance

On July 8, 2026, Levi Strauss reported fiscal second-quarter revenue of $1.56 billion, up 8% year over year (+6% organic), and diluted EPS from continuing operations of $0.24, up 20%, with adjusted diluted EPS of $0.28, up 27%. Management raised full-year reported revenue guidance to 7.0–7.5% growth from 5.5–6.5% and lifted the quarterly dividend 14% to $0.16. For a 173-year-old denim maker, that is a beat-and-raise built on direct-to-consumer leverage, not wholesale fill.

Correction (2026-10-03): the original version of this post stated rounded, unsupported figures carried over from the ledger's first bootstrap ($1.69B revenue, $230M net income, $0.38 EPS, 58.0% gross margin, and a synthetic segment table). Every number below now comes from the Q2 FY2026 10-Q and press release above, and the open_ledger/levi-strauss ledger was rebuilt from Levi's own 10-Ks and Q2 10-Q — revenue is $1,562M (+8.0%), net income $87.3M, diluted EPS $0.22 (+29.4%), gross margin 62.7%, and Beyond Yoga is a $42.6M growth brand, not a $155M line. The Dockers business, sold in fiscal 2025, sits in discontinued operations.

The Headline Numbers​

Levi Strauss' fiscal year ends the Sunday closest to November 30; Q2 FY2026 ended May 31, 2026. Every figure below is from the primary filings cited in Sources.

Revenue growth of 8.0% is the headline, but the ledger shows what that growth cost. Gross margin expanded 10 basis points to 62.7% on lower product costs and pricing actions, while SG&A grew 6.6% — slower than revenue — so the quarter showed genuine operating leverage: operating income up 13.1% and operating margin up 35 basis points to 7.8%. See the income-statement block below: every dollar is forced to reconcile, so a beat that comes from a wholesale pull-forward looks different from one that comes from direct-to-consumer (DTC) mix. This quarter is the latter — DTC grew 11% vs wholesale 5% and reached 51% of revenue — and the guidance raise is management's way of saying they believe the DTC leverage is sustainable.

Revenue Deep Dive​

Segment detail comes from the same filing that feeds the ledger. The thesis for this quarter is in the mix, not the total. (Channel and region cuts overlap; DTC dollars are derived from the disclosed 51% share.)

The mix is the story, not the total. DTC grew 11% — more than double wholesale's 5% — and crossed 50% of revenue for the first time at 51.0%, with e-commerce up 19% and DTC comparable sales up 6%. That mix shift is the gross margin story: company-owned demand carries the highest price per unit, and pricing actions plus lower product costs did the rest even as tariffs and FX were a headwind. Beyond Yoga grew 16% to $42.6M — small in dollars but the fastest-growing cut in the table, confirming the diversification beyond the red tab is not just a narrative. The ledger forces that relationship to be explicit — revenue is a single line, but the channel narrative behind it is why gross margin held at 62.7% while the company kept investing in selling. Note Europe's softness is timing, not demand: reported +4% but organic −1%, entirely because last year's distribution-center transition shifted shipments from Q1 into Q2 2025; first-half Europe is up 14% reported.

The Margin Story​

Margins are the check on revenue quality, and this series tells the restructuring story honestly. FY2023–FY2024 operating margins collapsed to 5.7% and 4.2% under Project Fuel restructuring charges ($188.7M in FY2024 alone) plus goodwill impairments — the ledger carries each on its own OtherNet posting rather than folding them into SG&A, so the cleanup is visible instead of buried. FY2025 is the snap-back: operating margin 10.8% and net margin 9.2% as restructuring fell to $24.5M. Q2's 7.8% operating margin trails the full-year 10.8% partly on seasonality and partly on the $13.5M of restructuring still flowing through — the guidance raise to 7.0–7.5% implies the second half re-leverages as that fades.

The One Big Question: Is the DTC Inflection Real or a Wholesale Pull-Forward?​

The defining question this quarter is whether the 8% revenue growth is being pulled from future wholesale orders or is a true inflection in DTC. Wholesale grew 5% — solid — but DTC grew 11%, crossed 51% of revenue, and posted 6% comparable-sales growth, and the two have different repeatability: DTC is owned demand, wholesale is sell-in that can be returned or not reordered. The ledger makes the repeatability test explicit: is the incremental revenue falling to gross profit at the same rate as the base, or is it being bought with a lower wholesale take rate or a higher rebate the income statement cannot hide?

The segment split sharpens it:

Growth is broad-based across every cut, and the one soft spot — Europe organic −1% — is last year's shipment timing, with first-half Europe up 5% organic. A company growing in all three regions while DTC takes share is being paid for a brand and channel advantage. But the wholesale 5% is the number to watch next quarter. If DTC is still double-digits but wholesale stalls, growth was borrowed. If both hold, the guidance raise to 7.0–7.5% is conservative.

Tracking a $6.3B company in plain text​

Double-entry forces every dollar to reconcile, which is why the Beancount ledger is the audit. The income-statement transaction below is the real filing, not a summary — negative income, positive expenses, and the check that proves they sum to zero. In apparel accounting, DTC and wholesale are not separate revenue lines — they are embedded in a single Revenue and CostOfRevenue, so a claimed DTC leverage has to show up as a better gross margin, which it does here at 62.7%.

; Revenue: 1562.0 | CoR: 582.9 | R&D: 0 | SG&A: 843.4
; OtherNet: 13.5 + 12.9 - 12.9 + 7.5 | Tax: 27.4 | Net Income: 87.3
; Check: -1562.0 + 582.9 + 0 + 843.4 + 13.5 + 12.9 - 12.9 + 7.5 + 27.4 + 87.3 = 0 ✓
 
2026-05-31 * "Levi Strauss & Co." "FY2026Q2 Income Statement"
  Income:Revenue                         -1562.0 MUSD
  Expenses:CostOfRevenue                   582.9 MUSD
  Expenses:ResearchAndDevelopment               0 MUSD  ; not separately disclosed
  Expenses:SellingGeneralAdministrative    843.4 MUSD
  Expenses:OtherNet                        13.5 MUSD  ; restructuring charges, net
  Expenses:OtherNet                        12.9 MUSD  ; interest expense
  Income:OtherNet                         -12.9 MUSD  ; other income, net (interest and other net to zero per the release)
  Expenses:OtherNet                         7.5 MUSD  ; net loss from discontinued operations (Dockers), net of tax
  Expenses:IncomeTax                       27.4 MUSD
  Equity:Adjustments                       87.3 MUSD  ; net income offset (RE set by balance assertion)

That block is not an illustration; it is the period that was validated with bea check and pushed to open_ledger/levi-strauss. The balance sheet tells the same story on the other side: assets = liabilities + equity at each period end, with the residual in Other explicitly noted so nothing hides in a plug.

The balance-sheet number that tells the narrative is Inventory at $1,157.6 million — down 7% year over year while revenue grew 8%. Levi is not growing by stuffing the channel; it is growing by selling through. That is the inventory-turn story the guidance raise is betting on. The ledger's pad/balance pairs show the same inventory reconciling period to period — Other current assets include inventory — so a claimed sell-through cannot coexist with a hidden inventory build. Through Q2 FY2026, it does not. The question for the second half is whether inventory stays lean while revenue grows 7.0–7.5%, or whether the wholesale growth was channel fill that appears as inventory next quarter.

The Multi-Year Arc​

* FY2024 DTC was 46% as filed including Dockers; the FY2025 10-K restates it to 47% on the continuing-operations basis (revenue $6,032.0M). Each ledger year keeps its own 10-K's as-filed presentation.

The five-year arc is a denim maker compounding revenue about 2% annually — not because Levi found a new product, but because it shifted from wholesale to DTC: revenue grew from $5.76 billion to $6.28 billion while DTC share went from 36% to 49%. That mix shift plus the FY2023–FY2024 restructuring cleanup is the entire margin story — net margin troughed at 3.3% in FY2024 and snapped back to 9.2% in FY2025. The ledger forces that relationship to be explicit — revenue is a single line that must reconcile to expenses, so a claim of DTC leverage cannot coexist with a hidden wholesale discount in CostOfRevenue. Through Q2 FY2026, it does not — gross margin reached 62.7% as DTC crossed 51%. The question for the second half is whether DTC can hold above 50% while wholesale grows, because that is the only path to the 7.0–7.5% guidance without adding stores.

The Verdict: Bull vs. Bear​

Bull Case

• DTC mix shift is structural: DTC grew 11% vs wholesale 5% and crossed 51% of revenue, with e-commerce +19% and 6% comparable-sales growth.
• Gross margin at 62.7%: up 10 bps on lower product costs and pricing, despite tariff and FX headwinds.
• Inventory down 7% YoY: $1,157.6M on +8.0% revenue — sell-through, not channel fill.
• Guidance raise plus dividend: 7.0–7.5% reported growth (from 5.5–6.5%) and a 14% dividend lift to $0.16; management does not raise both unless DTC is durable.
• Beyond Yoga +16%: the diversification beyond the red tab is growing twice as fast as the core.

Bear Case

• Wholesale 5% could be timing: Europe's organic −1% is last year's DC-transition shift; if wholesale stalls in Q3, growth was borrowed.
• Restructuring is not done: $13.5M of charges still flowed through Q2; Project Fuel savings must show in H2 for the 12% EBIT-margin target.
• Tariffs and FX are a headwind: called out in the release as a Q2 drag — guidance assumes China tariffs stay at 30%.
• Q2 operating margin 7.8% trails the 12% target: adjusted EBIT margin of 9.0% has 300 bps of leverage to find by year-end.
• Denim is cyclical: a consumer slowdown hits discretionary apparel first, and DTC is the first channel to see it.

Our Take

Our take: the quarter earns its raise. Levi grew revenue 8.0% and adjusted EPS 27% while cutting inventory 7% and expanding gross margin — that is DTC leverage, not wholesale fill, and the ledger confirms it: revenue at 1562.0, CostOfRevenue at 582.9, and the check sums to zero — no wholesale rebate is hiding in OtherNet. The bull case is that DTC holds above 50% while wholesale grows, giving the 7.0–7.5% guidance room to spare; the bear case is that wholesale 5% is timing that reverses in Q3. We lean bullish for the next quarter because inventory down 7% on +8.0% revenue is not a channel-fill tell — it is sell-through — but we would watch inventory. If it rebuilds past $1.3B in Q3, the growth was fill. For now, it is a 173-year-old brand acting like a DTC platform, and the plain-text ledger lets you verify that, dollar for dollar.