Levi Strauss Quarterly Revenue Misses Street Views Amid Soft Direct-to-Consumer Trends

06:47 AM EDT, 10/08/2026 (MT Newswires) -- Levi Strauss (LEVI) shares fell early Thursday after the denim maker reported fiscal third-quarter sales below market estimates, driven by softer-than-expected trends in its direct-to-consumer channel. The clothing company reported revenue of $1.61 billion for the quarter ended Aug. 30, up from $1.54 billion the year before, it said late Wednesday. The FactSet consensus was $1.62 billion. Adjusted earnings rose to $0.48 per share from $0.34, beating the Street's view of $0.36. The stock declined 1.6% in the most recent premarket activity. "While we delivered strong results across much of the business, our (direct-to-consumer) performance fell short of our expectations during the quarter," Chief Executive Michelle Gass said during an earnings call, according to a FactSet transcript. "We have a clear understanding of what worked and what did not, and we have already taken targeted actions to improve performance." Revenue in the direct-to-consumer channel, which accounted for 45% of total sales, grew 2%, slowing from an 11% increase in the second quarter, according to Levi Strauss. Sales in the channel declined 1% in the US and 2% in Europe, while comparable sales in the segment were flat. "In Europe, unseasonably warm weather across several key markets weighed on traffic for much of the quarter," Gass said on the call. "In the US, while our marketing continue to generate strong consumer engagement and reinforce brand heat, we had fewer major brand building moments than a year ago." The denim maker is increasing investment in areas of robust consumer demand, deepening its marketing investments and strengthening commercial execution across its stores and digital channels to address the traffic challenges in the US, Gass told analysts. The company expects its direct-to-consumer business to return to at least mid-single-digit growth in the fiscal fourth quarter and deliver high-single-digit growth for the full year, according to Gass. For fiscal 2026, the company now expects revenue to grow about 7% versus its previous guidance range of 7% to 7.5%, due to the impact of foreign exchange. The Street is looking for a 7.5% increase. The company raised its adjusted earnings outlook to $1.54 to $1.56 per share from its previous forecast of $1.46 to $1.52. The current FactSet consensus is $1.56. "Our updated outlook reflects both the benefit of the tariff refund and our decision to redeploy a significant portion of that benefit back into the business," outgoing Chief Financial Officer Harmit Singh said on the call. "We believe this balanced approach strengthens our competitive position, supports near-term growth and keeps us on track to deliver our annual algorithm of mid-single-digit revenue growth." Last week, Levi Strauss appointed Skechers USA CFO John Vandemore to succeed Singh in the same role at the company, effective Nov. 1. For the fourth quarter, Levi Strauss expects adjusted EPS to come in between $0.36 and $0.38, including $0.07 of net tariff refund redeployment, Singh said. Revenue is projected to rise by around 3%. The Street is looking for non-GAAP EPS of $0.42 and sales growth of 4%. Last month, American Eagle Outfitters (AEO) recorded an unexpected year-over-year increase in its fiscal second-quarter earnings, while sales topped expectations. In August, Gap (GAP) raised its full-year 2026 adjusted earnings outlook, but lowered the top end of its revenue growth guidance.