Levi's third quarter performance surpassed Wall Street revenue and profit expectations, yet the market responded negatively, indicating lingering concerns despite headline outperformance. Management attributed growth to strong direct-to-consumer (DTC) sales, international market acceleration—particularly in Asia—and category expansion, including women's and tops. CEO Michelle Gass emphasized strategic brand partnerships and product newness as key drivers. However, the company acknowledged ongoing margin pressures from tariffs and higher distribution costs, with CFO Harmit Singh noting, "We have implemented a $120 million accelerated share repurchase program and returned $283 million to shareholders year to date," but also highlighting the impact of increased inventory and supply chain transformation.

Is now the time to buy LEVI? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Levi's’s Q3 Earnings Call

• Laurent Vasilescu (BNP Paribas) asked about European market resilience amid industry-wide promotional activity. CFO Harmit Singh noted strong late-quarter acceleration and mid-single-digit pre-books for spring, emphasizing positive margin trends.
• Matthew Boss (JPMorgan) questioned demand trends and category momentum. CEO Michelle Gass responded that denim demand is accelerating globally, with Levi's gaining share in youth premium and value segments, and no material change in consumer demand seen.
• Ike Boruchow (Wells Fargo) inquired about SG&A leverage and the path to 15% margins. Singh detailed that gross margin mix, SG&A leverage, and modest advertising reinvestment are the key building blocks for long-term margin expansion.
• Paul Kearney (Barclays) asked about drivers of wholesale growth and inventory levels. Gass explained that most growth is from existing accounts responding to new fits and women's products, with inventory investments made ahead of the holiday season.
• Oliver Chen (TD Securities) sought clarity on U.S. growth sustainability and SKU rationalization. Gass highlighted ongoing DTC and wholesale momentum, with SKU reduction boosting productivity and aligning with a globally common assortment.

Catalysts in Upcoming Quarters

Moving forward, the StockStory team will be monitoring (1) the pace of DTC expansion and e-commerce penetration, (2) the effectiveness of tariff mitigation and supply chain transformation efforts on margins, and (3) sustained international growth, particularly in Asia and Europe. New product launches, especially in tops and women’s categories, as well as performance during the holiday season, will also be critical indicators of Levi's execution and future trajectory.

Levi's currently trades at $21.25, down from $24.53 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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