Levi Strauss' DTC-First Strategy Strengthens Growth Momentum

Levi Strauss & Co. LEVI is strengthening its direct-to-consumer (DTC) business as continued investments in retail execution, digital capabilities and customer engagement drive growth. During the second quarter of fiscal 2026, DTC revenues increased 8% organically, while comparable sales rose 6%, marking the company's 17th consecutive quarter of comparable sales growth. The DTC business accounted for 51% of total company revenues, reinforcing its role as Levi Strauss' primary growth engine.

Levi Strauss continued to build momentum across physical stores and digital channels. Management highlighted stronger retail execution, with improvements in key performance indicators such as units per transaction (UPT) and average unit retail (AUR). E-commerce revenues grew 17% organically, supported by higher traffic, improved conversion rates, higher UPT and AUR, and lower promotional activity. Despite growing nearly 60% over the past three years, e-commerce still represents only about 12% of total company revenues, providing significant runway for future expansion.

Customer engagement continued to improve during the quarter. Levi Strauss added approximately three million new loyalty members, taking its global membership base to nearly 50 million. The company is enhancing the program through more personalized experiences and greater use of customer data to deliver more relevant interactions, supporting stronger long-term relationships with consumers.

Alongside customer-facing initiatives, Levi Strauss is investing in infrastructure to support its DTC-first transformation. During the second quarter, the company completed the remapping of its European distribution network into an omnichannel model and consolidated e-commerce fulfillment into distribution centers in Germany and the United Kingdom. Management expects these initiatives, together with its ongoing global ERP rollout, to improve operational efficiency, inventory management and profitability while creating a stronger foundation for future growth.

The company's solid DTC execution is reflected in its improved outlook. Levi Strauss raised its fiscal 2026 reported revenue growth guidance to 7-7.5% from 5.5-6.5% previously and increased its organic revenue growth outlook to 5.5-6% from 4.5-5.5%. It raised adjusted EPS guidance to $1.46-$1.52 from $1.42-$1.48. The higher guidance underscores management's confidence that its DTC-first strategy and continued digital investments will support sustained growth and profitability.

LEVI’s Price Performance, Valuation & Estimates

Shares of Levi Strauss have gained 11.8% in the year-to-date period compared with the industry’s 1.9% growth.

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From a valuation standpoint, LEVI trades at a trailing price-to-sales ratio of 1.34X, below the industry’s average of 1.60X. It has a Value Score of B.

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The Zacks Consensus Estimate for Levi Strauss’ fiscal 2026 earnings implies year-over-year growth of 14.9%, while the same for fiscal 2027 indicates an uptick of 11.3%. Estimates for fiscal 2026 and 2027 have been revised upward by 4 cents each over the past 60 days.

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Levi Strauss currently carries a Zacks Rank #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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