Levi Strauss & Co. (NYSE: LEVI) stock extended its losses from the previous session in Thursday's premarket trading despite reporting stronger-than-expected earnings and revenue that was largely in line with Wall Street estimates.

The denim maker reported adjusted earnings of 48 cents per share, including a 16-cent benefit from tariff refunds before reinvestment. The net benefit was 11 cents per share. Earnings beat analysts' estimate of 36 cents per share.

Revenue of $1.61 billion came in just below the $1.62 billion consensus estimate, representing a marginal miss of less than 1%.

Levi Strauss received about $80 million in tariff refunds during the quarter. The company plans to reinvest roughly 75% of the benefit, including $25 million in the third quarter and approximately $35 million in the fourth quarter.

Meanwhile, warmer-than-usual weather in Europe weighed on store traffic during the quarter.

The company paid $62 million in dividends, up 11%, and announced plans for a $100 million accelerated share repurchase.

U.S. Direct-To-Consumer Business Shows Signs of Recovery

Global direct-to-consumer (DTC) revenue rose 2%, while comparable sales remained flat. Weaker traffic in the U.S. and Europe offset stronger demand in Asia and Latin America.

Levi Strauss attributed its U.S. DTC weakness partly to its back-to-school strategy. Its marketing focused on loose-fitting jeans, while shoppers increasingly preferred low-rise styles.

Following weaker demand in July and August, the company adjusted its product mix and marketing strategy. Sales trends improved in September and continued to strengthen.

U.S. DTC sales returned to growth in September. Management said global DTC revenue was tracking at a mid-single-digit pace early in the fourth quarter and expects high-single-digit growth for the full year.

European DTC sales also recovered as temperatures eased. Meanwhile, Levi Strauss expects global DTC revenue to grow at least at a mid-single-digit rate in the fourth quarter.

Regional Sales Growth Remains Strong

Organic revenue in the Americas rose 2%, supported by 10% growth in Latin America. Reported revenue increased 4%. The region's operating margin expanded 640 basis points to 29.9%.

European organic revenue increased 5%, while reported revenue rose 4%. Operating margin improved 150 basis points to 22.8%. Wholesale prebookings for spring and summer 2027 rose at a high-single-digit rate.

Asia delivered 10% organic revenue growth, while reported revenue rose 5%. Revenue in China increased 13%.

Among brands, Signature revenue jumped 13%, driven by demand for denim and lifestyle products. Beyond Yoga revenue grew 9% across both sales channels.

Levi's brand revenue increased 4%, with men's and women's categories recording mid-single-digit growth.

Women's DTC sales accelerated in September. The company expects its overall women's business to grow at a high-single-digit rate in the fourth quarter.

Levi Strauss Raises Earnings Outlook, Trims Revenue Forecast

Levi Strauss raised its fiscal 2026 adjusted earnings forecast to $1.54-$1.56 per share from $1.46-$1.52. Analysts expect $1.54 per share.

The company lowered its annual reported revenue growth forecast to approximately 7%, compared with its previous outlook of 7%-7.5%. Organic revenue is expected to increase about 6%.

The company reaffirmed its long-term goal of achieving a 15% operating margin. Management expects slower growth in advertising spending and lower distribution-transition costs to support margin expansion in 2027.

For the fourth quarter, Levi Strauss expects reported revenue growth of approximately 3% and organic growth of 4%. Adjusted earnings are projected at 36-38 cents per share.

CEO Michelle Gass warned during Wednesday's earnings call that competition in the denim market has intensified as existing brands become more aggressive and new players enter the category.

While denim demand remains strong, Gass said Levi's must continue innovating and responding quickly to changing fashion trends to defend its market leadership.

She added that the company continues to gain market share in men's and women's denim in the U.S.

LEVI Price Action: Levi Strauss shares were down 2.61% at $19.00 during premarket trading on Thursday, according to market data.