Maybe it’s all that time at Levi’s Stadium, which hosted the Super Bowl this year, but Michelle Gass is starting to sound just a little bit like a coach keeping her team pumped up at Levi Strauss & Co.
“We’ve put a lot of proof points on the board over the last year and a half,” said Gass, chief executive officer, in an interview with WWD.
Most recently, it was the first quarter, which came in stronger than expected on Tuesday with organic sales up 9 percent, while earnings per share topped analysts’ expectations. The retailer also pushed up guidance for the full year.
Perhaps more importantly, the quarter felt familiar as the company has posted a nice string of gains as it evolved under Gass’ leadership.
“We’ve talked about our key strategies around becoming a DTC first company, evolving from a denim’s bottoms business to head-to-toe denim lifestyle,” Gass said. “The consumer is responding.
“We’ve hit a real inflection point with DTC now being more than half of our business,” she said. “That was true for the quarter. We expect it to be true for the year.
“As we look ahead in this next phase, it’s all about execution. We don’t need a new strategy. Our strategies are working and there is a ton of runway ahead within those opportunities. So it gives us real confidence that I think investors can count on us delivering consistent results as we march toward the $10 billion [sales] target and the 15 percent target” for margins on earnings before interest and taxes.
Michelle Gass
Net income for the quarter rose 30.2 percent to $175.8 million from $135 million a year earlier.
Continuing operations posted adjusted earnings per diluted share of 42 cents — 5 cents ahead of the 37 cents Wall Street analysts anticipated, according to Yahoo Finance.
Net sales for the three months ended March 1 increased 14 percent to $1.7 billion.
Investors approved, sending shares of the company up 6.3 percent to $20.95 in after-hours trading.
By region, organic sales in the Americas were up 7 percent to $856 million, while Europe was up 10 percent to $496 million and Asia was ahead 12 percent to $347 million. Sales at the Beyond Yoga brand, which Levi’s acquired in 2021, rose 23 percent to $43 million.
The Americas was the most profitable division, although its operating earnings slipped 4 percent to $163 million. Those declines were more than offset by gains in Europe, where operating profits were up 26 percent to $129 million, and in Asia, up 22 percent to $70 million.
Overall, the denim company’s adjusted margins on earnings before interest and taxes topped guidance, coming in at 12.5 percent. That marked a decrease from 13.4 percent a year earlier, reflecting both the cost of tariffs and increases in advertising, where spending was front-loaded for the year to support the Behind Every Original.
“The Levi’s brand is really strong,” Gass said. “The brand is hitting a new stride. Shaping culture, participating on the biggest stages, which kicked off earlier this year with the Super Bowl.”
The denim brand decided to really lean in when the final game of the professional football season was hosted on its home turf.
“We really wanted to amplify that effect,” the CEO said. “That is why we did launch our global campaign, which showcases our unique position at the center of culture and really the intersection of sports, fashion and music. It garnered 1.4 billion impressions, ranking among the top Super Bowl ads. It wasn’t a Super Bowl ad. It was a launch of a global campaign that we expect to help support our momentum throughout the year.”
The quarter made Levi’s more bullish on its business for all of 2026.
The company forecast organic sales would rise 4.5 percent to 5.5 percent this year, instead of the 4 percent to 5 percent bump initially projected.
And the range for adjusted earnings per share was nudged up to $1.42 to $1.48 from $1.40 to $1.46.
Gass, the former Kohl’s Corp. CEO who joined Levi’s in 2023 and became CEO a year later, has cut costs, zeroed in on the AI opportunity and doubled down on what have long been seen as the denim brand’s growth areas, including women’s and tops.
Now she’s getting ready to bid adieu to a key partner, Harmit Singh, who’s been the company’s chief financial officer for 13 years.
Singh, who helped steer Levi’s back onto the public market and added the role of chief growth officer in 2023, plans to transition to special adviser when a successor is found and then retire.
“Harmit will be entering his new chapter, but not quite yet,” Gass said. “We have launched a search. That will take some time. He’s going to stay in his role, obviously for the foreseeable future. And then once we do find his successor, he will carry on as an adviser. It is really about just kind of laying the groundwork for the transition.”
The CEO praised Singh for being a “trusted leader across the organization” and the “high-caliber finance team he built.”
For now, Singh still has an eagle eye on Levi’s books and is pushing for more of the company’s sales to filter down to the bottom line — to “drive a higher flow through,” he said — while still investing in advertising and new stores.
“Companies like Ralph [Lauren Corp.] and Tapestry [Inc.] have done a great job,” Singh said in the interview. “They started the journey a couple of years ago and it is not about fewer people, it is about managing the resources we have in a different way, and it’s about making sure our priorities are completely aligned to where the company is.”
AI has been a steady part of the conversation at Levi’s for years and Singh said the technology is being put to work in two main areas — improving the customer experience and driving operational efficiency.
“The operational efficiency is largely about automating stuff,” he said. “It’s about taking some of the redundant manual transactions and using AI.”
Gass added that: “AI is going to be an important lever so that we can basically grow revenue a lot faster than we grow costs. It’s not about replacing the headcount. It’s about how you get more highly impactful results with the people you have. Now, jobs will evolve, and that’s why we’re training our folks and doing all that, but it’s really around the culture. We’re investing a lot around the culture so that people see their future as the AI enabling” their jobs.
