Levi's net profit in the second quarter reached $87.3 million, with DTC business accounting for over 50% for the first time.

On July 8, clothing manufacturer Levi Strauss & Co. released its second quarter report for fiscal year 2026, ending May 31. During the period, the company achieved revenue of $1.56 billion, an increase of about 8% compared to $1.45 billion in the same period last year; net profit was $87.3 million, compared to $67 million a year earlier.

Based on the second quarter financial performance, Levi's adjusted its full-year guidance: expected full-year sales growth was raised from 5.5%-6.5% to 7%-7.5%; the expected range for adjusted earnings per share was raised to $1.46 to $1.52.

The expansion of direct-to-consumer business was the core variable affecting the revenue structure this quarter.

In the second quarter, Levi’s DTC channel net income increased by 11% year-on-year, accounting for 51% of total revenue for the first time, surpassing traditional wholesale business. Among these, e-commerce net income grew 19% year-on-year. Traditional wholesale channel net income increased by 5%.

In terms of growth drivers, approximately 50% of the quarterly revenue growth came from product price increases, with the other 50% from actual unit sales growth.

Looking at regional performance, international markets provided the main incremental growth, with the Asian market achieving 12% organic growth in the second quarter, leading all regions.

In supply chain segments closely related to the China market, company management disclosed that current financial expectations have taken into account the assumption that the U.S. will maintain a 30% tariff on Chinese imports. To hedge against this pressure, Levi’s is adjusting its sourcing base, shifting some production capacity away from China and other regions to diversify tariff risks.

In terms of profit margins, the company’s gross margin increased slightly by 10 basis points to 62.7% this quarter. Lower product line costs and implementation of pricing strategies contributed to gross margin, though some of this was offset by currency fluctuations and the aforementioned tariff costs.

Still, from a business structure perspective, the Levi’s brand remains the company’s core source of revenue.

In recent years, the company has tried to expand into non-denim categories such as womenswear and tops, and broaden business scope through acquisition of yoga wear brand Beyond Yoga. However, these businesses remain relatively limited in scale and have not changed the company’s reliance on denim apparel.

A current focus in the market is whether Levi’s can maintain its growth momentum.

As overall apparel industry demand recovers slowly, the brand needs to continue attracting younger consumers, and improve sales performance through new product development and channel optimization. Meanwhile, the increased proportion of direct-to-consumer channels can help improve profitability, but also means higher operating investment. The company needs to balance scale growth with cost control.

In addition, the company has gradually adjusted its business portfolio in recent years, reducing investment in some non-core businesses and focusing more resources on the Levi’s brand. This strategy helps improve operational efficiency, but also means that future growth will rely more heavily on the performance of the core brand in the market.

Overall, Levi’s second quarter financial report shows both revenue and profit growth, continued support from direct-to-consumer channels, and improved performance in some regional markets. However, given persistent uncertainties in the apparel consumption environment, the company’s future growth will depend on the competitiveness of its core brand, changes in consumer demand, and the effects of channel adjustments.

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