Levi Strauss & Co. delivered fourth-quarter adjusted earnings per share of $0.41, surpassing analysts’ consensus of $0.39. Revenue for the three months ended November 30 totaled $1.77 billion, ahead of the $1.71 billion estimate but down from $1.84 billion a year earlier. Gross margin expanded by 120 basis points to 56.2%, driven by improved pricing and cost efficiencies. Net income rose 8% year-over-year to $155 million, reflecting stronger product mix and tight control over operating expenses, which grew just 2% despite ongoing freight inflation.

Management issued adjusted EPS guidance of $1.40 to $1.46 for fiscal 2026, slightly below the $1.48 consensus. This outlook reflects planned investments in product diversification and technology, as well as anticipated pressure on wholesale channels in North America and Europe. Free cash flow is expected to be in the range of $300 million to $350 million, modestly below last year’s $375 million, as inventory levels normalize following an elevated build in the first half.

For 2026, Levi’s plans to reduce reliance on its core jean business—historically 70% of revenues—by accelerating growth in tops, dresses and non-denim bottoms. The company aims for non-denim categories to account for at least 30% of total sales by year-end, up from 24% in fiscal 2025. Key initiatives include expanding women’s dress assortments by 25 new styles and increasing tops SKU count by 40%. Leadership anticipates these segments growing at a mid-teens percentage rate, outpacing flat or modest growth in denim.

Levi’s is rolling out a virtual AI stylist tool across its direct-to-consumer channels, following a successful pilot in 50 flagship stores. Early results indicate a 20% lift in average order value and a 15% improvement in conversion rates for customers using the service. The company plans to integrate the AI assistant into its mobile app by Q2 2026 and leverage machine-learning insights to optimize inventory allocations across its global network of 3,000 outlets.