Thank you for joining us on the call today to discuss the results for our second quarter of fiscal 26. Joining me on today's call are Michelle D.

Gass, our President and CEO and Harmit J. Singh, our Chief Financial and Growth Officer.

We would like to remind you that we will be making forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in our reports filed with the SEC.

We assume no obligation to update any of these forward-looking statements. Additionally, during this call, we will discuss certain non GAAP financial measures, which are not intended to be a substitute for our GAAP results.

Definitions of these measures and reconciliations to their most comparable GAAP measure are included in our earnings release available on the IR section of our website, investor.levistrauss.com. Please note that Michelle and Harmit will be referencing organic net revenues or constant currency numbers unless otherwise noted.

And information provided is based on continuing operations. Finally, this call is being webcast on our IR website, and a replay of this call will be available on the website shortly.

Today's call is scheduled for 1 hour, so please limit yourself to 1 question at a time to allow others to have their questions addressed. And now I would like to turn the call over to Michelle.

Thank you, and welcome, everyone, to today's call. We are pleased to report another strong quarter with Q2 exceeding expectations across the top and bottom line.

These results highlight the strength of our business model, underpinned by the enduring power of our iconic brand and how we are driving growth across markets, channels, categories, consumer demographics. The progress we are delivering today is the direct result of the strategic choices we have made to sharpen our focus and unlock the full potential of the Levi's brand.

Choices that have positioned us to capture our highest return growth opportunities. As we continue to evolve into a DTC-first lifestyle company, we are driving more consistent and faster growth.

Expanding our addressable market, and improving our profitability. Quarter after quarter, our results demonstrate that our strategies are working and momentum is building.

And we believe we are still in the early innings of unlocking the full opportunity ahead, with more ways to win than ever before. Let's now turn to the details of the quarter.

As a reminder, all numbers Harmit and I will reference are on an organic basis. We delivered solid top line performance this quarter, with organic net revenues up 6%, Our international markets continue to demonstrate strong momentum, led by a 12% increase in Asia, while The US delivered a 6% increase.

Our direct-to-consumer business continues to lead our growth, with revenue up 8% and comparable sales up 6% in Q2. Delivering our 17th consecutive quarter of comp growth.

Global wholesale increased 3%, led by strength in the U.S. Wholesale channel.

Our evolution into a denim lifestyle brand is enabling us to continue to drive outsized performance in women, up 11% in the quarter. And we further extended our leading market share position in both men's and women's, reflecting the strength of our brand, impactful marketing, and a steady pipeline of product innovation.

Importantly, top line momentum translated into strong bottom line delivery, with margin expansion and strong earnings growth. On the strength of our performance, we are raising our full year sales and EPS guidance.

Harmit will share more shortly. I will now walk you through highlights from the quarter in the context of our strategies.

Our first strategy is to be brand led, powered by a best in class global marketing team that moves with agility and keeps Levi's firmly at the center of culture around the world. In Q2, we continued to build on our global behind every original campaign following its successful launch of the Super Bowl earlier this year.

The campaign features a dynamic mix of cultural voices across music, sport, and fashion, including Doechii, Questlove, and basketball superstar SGA. In line with our strategy to align global campaigns with local relevance, we expanded the talent roster to include top local talent across key markets, including Mexican pop star and actress Belinda, and leading Bollywood actress, Alia Bhatt.

Also activated our collaboration with K pop superstar and Levi's brand ambassador Rosé, through pop-up shops in key Asian markets. Reinforcing our focus on growing the women's business in the region.

Ahead of the global soccer championship, Levi's launched denim product collaborations with the U.S. Mexico, England, and France Football Federations.

And when the soccer championship came to Levi's Stadium in June, our team turned a branding restriction into a viral marketing campaign. Demonstrating our ability to operate at the speed of culture through bold, agile execution.

This drove the most viewed, shared, and commented post in Levi's history. Generating approximately a billion press impressions.

Now turning to product. As I mentioned earlier, we remain in the early innings of capturing a significant opportunity ahead.

And our product engine rooted in denim is central to unlocking that growth. For more than 150 years, denim has anchored the global wardrobe, outlasting virtually every trend in fashion.

It began as practical workwear and yet has become a global symbol of style and self expression. Today, the continued trend toward casualization is a tailwind fueling denim growth globally.

And the category is projected to grow mid single digits annually through 2030 outpacing the category's historical growth. As the global market share leader in denim, Levi's is uniquely positioned to capture this opportunity, and we are accelerating that capture through a steady pipeline of innovation and fits and fabrics.

In Q2, our bottoms business grew 6%, driven by strength in core fits with newness adding incremental momentum. Loser silhouettes continued to deliver solid growth.

Our May for her and 05/2001 Loose for him were key standouts in the quarter. Reinforcing both the longevity and relevance of our core icons.

We are also seeing continued strength across a range of other silhouettes, including our Cinch Baggy franchise, wide leg, and low lucent women's and relaxed and boot cut in men's. Importantly, our core fits across skinny, slim, boot cut, and straight, continue to make up the majority of our bottoms business.

Reflecting our healthy and diversified bottoms portfolio. Our push into categories beyond denim bottoms has expanded our total addressable market and contributed roughly a third of our top line growth in the quarter.

This reflects our strong progress in expanding our assortment for summer creating more warm weather head-to-toe offerings for our consumers. We are seeing strength across key summer categories, including lightweight denim, linen shirts and dresses.

Our expanded shorts assortment is also resonating, with the category up 11% in the quarter. In women's, we also saw exceptional strength in seasonal trends, including white denim, which grew 70%.

Strong in store execution is bringing these assortments to life through compelling merchandising, outfitting, and seasonal storytelling. We are making great progress in our evolution into a true head-to-toe denim lifestyle destination, and our tops business remains a meaningful way to expand our total addressable market.

In Q2, tops were up 5%, or up 7% when excluding the impact of the European distribution center transition last year. Key-to-retail categories, like blouses, wovens, sweaters, and polos are driving strong growth outpacing legacy categories like graphic tees.

As these legacy categories continue to mature within our portfolio, we are actively refining how we invest across our traditional and newer styles to maximize the opportunity. And we expect the business to accelerate in the second half of the year.

BlueTab continues to gain traction as the most premium expression of our brand. Importantly, BlueTab is introducing the Levi's brand to a new consumer.

And we are already seeing early share gains at the premium end of the category. While still in the early stages, we see significant runway ahead as we scale the business.

Unlocking a sizable premium segment that remains underpenetrated for Levi's today. Now shifting to our strategy to become a best in class DTC-first retailer.

Our global direct-to-consumer business was up 8% in Q2 and comprised 51% of total company revenue in the quarter. Comparable sales were up 6%, underscoring the strength of our retail execution, with gains across key store KPIs, including UPT, and AUR.

Our continued efforts to premiumize the site experience and elevate our online assortment drove another strong quarter in our e-commerce channel, a 17%. Ecom growth was fueled by solid performance across all key metrics, including increased traffic, better conversion, higher UPT, and AUR growth as we reduce promotional activity on our site.

This business has grown almost 60% over the past 3 years, yet still only comprises a approximately 12% of our overall revenues. Remaining underpenetrated versus peers and representing a meaningful opportunity for continued growth.

This quarter, we welcomed 3 million new members to our loyalty program, bringing global membership to nearly 50 million. We are continuing to enhance the program through more personalized experiences and leveraging our data to deliver more relevant and connected interactions.

Global wholesale was up 3% reflecting strength across customers in US wholesale. The women's business was a particular standout and sell out trends across The US wholesale channel remain healthy.

Globally, our wholesale partners are increasingly leaning into our diversified lifestyle assortment, reflecting strong consumer demand, and confidence in our broader offerings. Now turning to our third strategy, powering the portfolio.

While international represents approximately 60% of our business today, we see significant runway ahead with many markets still early in their growth journey. This quarter, international revenue grew 6%, led by double digit gains in Asia and Latin America.

This year, we celebrate 60 years of the Levi's brand in Mexico, our second largest market globally and a key contributor to international performance with Q2 growth of 15%. Supported by strong brand equity, Mex Mexico remains both a meaningful revenue driver and a cultural and strategic hub.

Across Latin America, momentum is accelerating, with double digit growth led by Brazil, The Andes and Colombia. We see continued opportunity to build on the strength through store openings, e commerce, and wholesale expansion.

In Asia, performance was strong across markets with Q2 growth led by Turkey, Japan and India. In China, we are beginning to see signs of progress, supported by new leadership and improvements in product and execution.

While still early, we are encouraged by a return to growth and improving underlying trends. Signature, our value focused brand, grew at a low single digit rate in Q2 and was up 9% for the first half of the year.

We expect growth to continue and build through the second half of the year, supported by an expanded lifestyle assortment including a broader tops offering. Beyond Yoga was up 16% led by strength in ecommerce.

Momentum continues to be fueled by newness and expansion into lifestyle categories, including the launch of a new linen capsule which quickly became 1 of the brand's top selling collections. In closing, this quarter again reinforces the strength of our strategy and the progress we are making.

We have sharpened our focus, elevated the Levi's brand and raised our level of execution. Building a stronger and more durable business.

While we remain mindful of the external environment, the momentum we are seeing across our strategic priorities gives us confidence in the path ahead. I want to thank our teams around the world for their relentless focus on the consumer and the disciplined execution that continues to drive our results.

With that, I will turn it over to Harmit. Harmit.

Thank you, Michelle. Q2 was another strong proof point that our profitable growth algorithm is working.

We exceeded expectations on both the top and bottom lines, expanded margins, delivered strong EPS growth, and generated significantly stronger free cash flow. This quarter, once again, reflected the power of the end.

Growth across wholesale and DTC, the U.S. and international women's and men's, tops and bottoms units, and AUR.

Our recently expanded TAM contributed roughly 1-third of revenue growth reinforcing the traction of our denim lifestyle strategy. Improving flow through remains a priority, and Q2 showed clear progress.

Gross margin expanded despite pressure from tariffs, and disciplined SG&A management converted top line growth into stronger than expected bottom line delivery. Given our solid first half performance and business momentum, we are passing the entire Q2 beat and raising our full year revenue and EPS outlook for the second consecutive quarter.

I will walk you through the details shortly. Before discussing Q2 results, I will update you on 2 infrastructure initiatives that support our transformation into a DTC-first lifestyle company.

First, an update on our distribution network transformation. We completed the remap of Europe to an omnichannel distribution network at the end of quarter 2, consolidating e-commerce fulfillment into our centers in Germany, and The UK.

We are seeing benefits in operational efficiency, distribution expense leverage, and profitability in Europe. In The US, we remain on track to complete the transition of Hebron, our own distribution center, to Merce by the beginning of the fourth quarter.

The transition has taken longer than planned as we balance strong demand with the operational shift. As we exit parallel operations and consolidate into the new network, we expect to eliminate duplicative cost simplify the operating model, and improve inventory and service levels.

We also reached a major milestone in our global ERP transformation, migrating Asia and beyond yoga onto a new global platform after the successful transition in North America. Europe and the remaining Latin American countries are on track for completion by mid 27.

Once complete, the company will operate on a single ERP enabling faster decision making supporting our DTC-first model all while creating the foundation to scale AI and automation globally. Now moving to our Q2 results.

Net revenues increased 8% reported and 6% organic. This is despite a 2-point drag from last year's Europe distribution center transition.

Gross margin was better than expected. And expanded 10 basis points to 62.7%.

Lower product costs and pricing actions were tailwinds. Tariffs and foreign exchange were a headwind in the quarter.

Adjusted SG&A increased 6.5% primarily reflecting higher selling expenses and unfavorable foreign exchange. As a percentage of revenue, however, adjusted SG&A leveraged 80 basis points underscoring the discipline and scalability of our cost structure.

As a result, adjusted EBIT margin expanded 70 basis points to 9%, reflecting our ability to convert top line growth into margin expansion. Adjusted EBIT dollars also grew 18% much faster than revenue growth.

This flow through drove adjusted diluted EPS of $0.28, ahead of our guidance and represented growth of 27% year over year. We ended Q2 with inventory down 7%.

With a healthy mix of current product across regions reflecting stronger inventory management and continued progress in reducing excess and obsolete. For the full year, we expect inventory dollars to be slightly above last year but below expected sales growth positioning us to service back-to-school and holiday demand.

Building on a strong Q1 performance, in quarter 2, adjusted free cash flow increased nearly 80% year over year to $231 million driven by business momentum and improved working capital. Turning to our capital allocation strategy.

Our approach remains disciplined and balanced. Prioritizing high ROI growth opportunities while returning at least 55% to 65% of free cash flow to shareholders through dividends, and opportunistic share repurchases.

In 2026, our capacity to return cap capital is even stronger. Supported by docker sales proceeds and execution of our ASR.

Consistent with this commitment, we are increasing our Q3 quarterly dividend by $0.02 to $0.16 per share. Double our annual increase over each of the past 2 years reflecting confidence in our earnings and free cash flow generation.

Now let's review the key highlights by segment. The Americas delivered 7% growth.

with the U.S. up 5% on momentum in both DTC and wholesale.

Operating margin declined 40 basis points driven by the unfavorable impact of tariffs and the favorable impact of cost initiatives and pricing actions. Europe declined 1% in Q2 reflecting last year's distribution center transition while first half revenue grew mid single digit consistent with our full year guidance.

Underlying trends remain healthy. With DTC up 7% and strength in key markets, including Germany, and The UK.

Q2 operating margin increased nearly 400 basis points to 21.1% driven by gross margin strength and lower distribution expenses. Looking ahead, we are encouraged by high single digit wholesale preorder growth for H2.

Asia, net revenues increased 12%. Fueled by double digit growth across both DTC and wholesale.

Performance was strong across markets, as consumers continue to gravitate towards our expanded denim lifestyle assortment. Operating margin was 15%, expanding 350 basis points versus prior driven by revenue acceleration, gross margin strength, and SG&A leverage.

Now turning to guidance. Based on our strong first half performance, and business momentum, we are raising our full year outlook.

The tariff environment continues to be uncertain. And our updated guidance continues to assume incremental US tariffs on imports from China at a 30% rate and the rest of the world at 20%.

Our guidance does not assume any benefit from potential tariff refunds which are approximately $80 million paid today. For the full year, we are raising our revenue outlook and now expect reported net revenues to increase 7% to 7.5% and organic net revenues to be up 5.5% to 6%.

This assumes foreign exchange is a 150-basis-point tailwind to sales versus our previous expectation of a 100-basis-point benefit. All of which has already been realized in H1.

Gross margin is now expected to expand approximately 10 basis points to prior year. Driven by the structural drivers of our business.

Higher DTC, women's, and international along with reduced promotional levels and cost efficiency. We expect adjusted EBIT margin to be 12% for the full year a continuation of the sequential margin improvement we have seen over the past several years.

While taking proactive decisions to reinvest in the infrastructure investments that I highlighted earlier. And net new store openings.

And we are raising our adjusted diluted EPS expectations by $0.04 to the range of approximately $1.46 to $1.52 up from our previous range of $1.42 to $1.48. And with regards to store openings, we continue to expect to open 50 to 60 net-new doors this year with the majority of net openings weighted to the second half of the year.

For quarter 3, we expect reported and organic net revenues to be up 4% to 5% for the quarter reflecting no expected benefit from foreign exchange. Gross margin is expected to expand around 10 basis points versus prior to 61.8% despite a roughly 70-basis-point FX headwind.

Adjusted EBIT margin leverages approximately 10 basis points to 11.9%. This translates to an adjusted diluted EPS of approximately $0.34 to $0.36, which includes a $0.02 to $0.03 headwind from a higher tax rate and foreign exchange impacting gross margin.

A few comments on the phasing of EBIT margins in the second half. H1 margins adjusted for the Q1 timing of A&P were up 30 basis points.

We expect that progression to continue into Q3. The EBIT expansion becomes more pronounced in Q4, as we begin to lap the full impact of tariffs in Q4 last year less FX pressure on gross margin, the normalization of A&P spending, reduced duplicative distribution cost, and continuing to drive SG&A discipline.

The underlying message is consistent. We are converting revenue growth into higher earnings and stronger profitability.

And as a result, we expect to end the year with adjusted EBIT margins up 60 basis points continuing our trajectory over the last 3 years. In closing, our results demonstrate a healthy long term growth algorithm mid single digit revenue growth expanding margins, strong earnings acceleration, healthy cash flow, and disciplined capital return.

With a strong first half and positive business trends, we are passing through the Q2 beat and raising a full year top line and bottom line outlook for the second consecutive quarter. We remain confident in our path to $10 billion in revenue and 15% operating margin supported by an expanded TAM and a clear road map for profitable growth.

And with that, I will open the line for Q&A.

Good afternoon, Michelle and Harmit. Thanks for taking my questions.

I have got 2 questions here. First is on U.

S. Wholesale.

I think you mentioned Signature grew high teens last quarter. I think it was up low single digits this quarter.

Curious to know what you are seeing with the more value based consumer and channel overall. And then the second question is on Europe.

Europe DTC grew 7% organically this quarter versus 5% last quarter. So DTC is actually accelerating.

Curious to know what you which how should we think about European DTC for the third quarter? And are you still confident that Europe as a whole should grow mid single digits in the second half with prebook still up high single digits?

Thank you very much.

Thanks, Laurent, for your questions. I will take the first 1 on signature and then turn it over to Harmit on Europe.

So, you know, overall, we see signature as an important business for us. it is it is on the smaller side, about $300 million annually.

And we do expect it to accelerate in the back half. But I do think it is important when we look at this quarter relative to Q1, you take that in total and signature was up 9% in the first half.

And so we see that in the second half being either high single digits, low double digits, and we see a lot of opportunity. You know, it is a solid, resilient business.

They are taking sort of a page out of the playbook for Levi's Red Tab playbook and really leaning in to newness into lifestyle offerings, and that is resonating. We see opportunity in tops, in the women's business in particular, In signature, women's is only 30% of the business.

And so we see an outperformance there with women's, and we expect that to continue. So I think to your question on the health of that value based consumer, we are optimistic there.

And in fact, I think overall, our consumer is proving to be quite resilient. You know, satisfies an important part of our segmentation strategy on that more value-oriented consumer, but we are seeing how with that consumer, with our core consumer, and even on the premium side of things.

So, you know, with wholesale, you will always see some variations quarter to quarter. Really important to look at it in the totality, and like I said, 9% first half, and we are expecting that to accelerate in the back half of the year.

And then over to Harmit on your question. So, Laurent, on Europe, as you know, given the timing of Dorsten last year, which is the distribution center, which is off to the races.

I will talk about it in a second. But Europe was up 5%.

In the first half. that is consistent with our full year guide.

Demand remains strong. And the business is really driving margin expansion as my remarks reflected.

The strength is across most markets, It includes The UK, Germany, and Italy. So if you just take what is the impact of in quarter 2?

it is about 8 percentage points. So Europe, instead of minus 1, would have been sorry.

Minus 1 would have been plus 7. So that is fact number 1.

Your question about DTC, DTC has accelerated. In quarter 2 And your question about Q3 and Q4, we expect DTC to be mid to high single digit.

I mean, that is the expectation. But wholesale is a big piece of the business.

And as you heard from my remarks, our prebooks are up high single digits, reinforcing confidence in H2 and the full year outlook. So, you know, that is our perspective.

You know, I want to spend a minute on profitability. You heard it in the prepared remarks.

Gross margins are up over 300 basis points. Distribution costs are down 100 basis points because the entire you know, the vision of what we are trying to do on distribution is coming to life, and Europe was the first to go at it.

And operating margins are up dramatically. So I think overall, Europe is in a good spot.

And unlike some of the other folks, you know, we are not seeing that you know, And we are ready for this for the hot weather, weather. Warm weather as Michelle reflected in her remarks.

Very helpful. Thank you very much, and best of luck.

Thanks, and congrats on another nice quarter. Thanks, Matthew.

Thank you. So 2-part question.

Michelle, 6% organic revenue growth on top of 9% growth a year ago. Could you speak to areas of strength that you are seeing across categories and elaborate on the expansion in the brand's total addressable market that you cited as tied to the expanded assortment?

And then, Harmit, if you could just walk through drivers behind the sequential moderation that you embedded in the back-half revenue outlook? I think it is roughly 4% relative to the front half up roughly 8%.

Just any change in consumer behavior to date that you have seen across regions, or is this just more taking a prudent outlook?

Okay. Do you want to Yeah.

I will kick it off with what we are seeing to date. So I think what is really exciting, Matthew, is that we are seeing broad based growth.

We are seeing it across channels. Genders, categories, and geographies, and it is a direct reflection of our strategy continuing to fuel that momentum.

If you take channel as an example, both DTC and wholesale were again positive in the quarter. As you know, DTC up 8%, wholesale up 3%, and wholesale actually contributed more to the beat, if you will.

But, you know, as expected, we expect DTC to be that outperformer as we continue to have a lot of runway there. If you take gender, again, fantastic quarter on women's, 11% double-digit again.

With a steady growth in the men's business, which is highly mature. You know, it is worth mentioning on men's and women's.

I did mention in my prepared remarks, but number 1 market share position and gaining share. And this is on the bottoms business, even speaking to our expanded addressable market.

So we are really pleased with that. Category, again, we saw growth in both tops and bottoms.

Bottoms up 6%. Tops up 5%, but we were impacted by this Europe's Dorsten distribution shift.

So it was actually up 7%. I think what is really great on both fronts is that we are seeing innovation fuel the growth on both tops and bottoms.

On bottoms, while we have a solid business and more traditional fits, we are seeing loose baggy, new fabrications drive momentum. Tops, we are seeing outperformance in these newer categories that really complete the head-to-toe outfitting Blouses, button downs, polo, sweaters, all outperforming and then geography.

Again, very exciting U.S. market up 6% overall.

I am looking at all of our brands, Levi's and Beyond Yoga. Even Levi's very solid, up 5%.

And then up 6% international with a big outperformance on the Asia side, as you heard, 12%. So you know, this is the kind of report we like to share because you know, it is all working and then, you know, it really does speak to in, you know, in this in this chapter of Levi's where we are really leaning into head-to-toe denim lifestyle, and you mentioned it, our expandable our expanded TAM is significant.

We are going from playing in the denim bottoms business to a apparel with a very focused view on what fits in our vision of head-to-toe denim lifestyle. And I think the team's doing a great job.

And we have got, you know, we have got a lot of upside and as we sit here today, the consumer is responding and we have more ways to win than we have ever had.

So second question, I think there was 2 parts to the second question. what is the moderation?

Is it prudent and conservative? And then what is the health of the consumer?

Let me start with the consumer. Our consumer continues to be resilient.

As reflected in another quarter of strong results. it is broad based across channel geographies and categories.

So you think of the beat It, geographically, it came from the U.S. and Asia.

Europe was as expected. It came from wholesale and came from women.

Demand is really healthy because 2-thirds of our growth is driven by more units, and that is largely the expanded TAM. And the underpenetrated areas of women and tops.

And so that is point number 1. Second is we are seeing strength across value, core, and premium.

Levi's Red Tab, for example, grew, you know, 5% or 6%. Signature, you know, we expect this is just largely a timing.

We expect second half to be strong. And BlueTab is just getting started.

And so that is the first piece. Yes.

there is you know, under the umbrella of the macro uncertainty, I think we have feeling good about it. Your question about second half versus first half, it is prudence.

It is conservatism. You know?

And it is probably you know, a couple of points on DTC and maybe a little you know, more conservative on wholesale. Our job is to continue to beat as we have done.

If we take the last 7 quarters, Matthew, we have beat in the top line. We beat in the bottom line.

We raised our guidance for 2 quarters in a row on a full year basis. So our perspective is, you know, as Michelle said, we have more ways to win.

The power of the and you all heard, which is everything seems to be working. is what we hope carries us through the year.

Great color. Best of luck.

I get it. It was muted.

Sorry. Yep.

Congratulations, and nice to see the progress, everyone. On Beyond Yoga, you mentioned hi.

You mentioned strength in ecommerce. How is Beyond Yoga doing in the stores?

What do you see the game plan for that going forward? The marketing has been very effective.

Like you had music last year, a bit of sport this year, how are you thinking about marketing for the back half of the year? Any difference from overseas or by channel or region?

Thank you.

Fantastic. Okay.

I will take those 2 questions, Dana. So first, on Beyond Yoga, you know, we are pleased to continue to see that nice double digit growth of 16%, high-teens again this quarter, and that is being driven by, you know, a combination of factors.

it is product, and really expanding beyond the traditional activewear of leggings and tanks and moving into lifestyle and that is working. I mean, they are seeing a lot of consumer resonance with casual pants, travel wear, linen was a new platform they introduced this summer, it is done fantastic.

Tops, sweaters, dresses. So that is working.

We called out e-commerce because that is the biggest part of the business. To date, but we are optimistic on the multichannel approach, and you asked about stores.

You know, we are in the very early days. We have less than 20 stores, but we are learning a lot.

And the newer stores that we are opening are working. there is a new merchandising approach.

We are building slightly bigger stores so we can bring the full expression I would also say in beyond yoga's standpoint, men's is an untapped opportunity, and as we have been bringing the men's category forward, that consumer is responding. So there is a lot that we are excited about in Beyond Yoga.

You know, it is still early innings for this brand. But, we see a lot of green shoots on the business.

So that is 1. Your second question is on the brand and marketing.

And I tell you, the marketing team just continues to deliver. And, you know, every quarter, you know, there are new ways for us to show up at the center of culture, and we do that globally.

We do that locally, and we do have unparalleled brand heat around the world. The strength of our brand, I mean, it is a massive competitive advantage, and we do keep raising the bar.

I think most recent example, of course, and still quite topical, is around the World Cup. And here at Levi's Stadium, you know, was an opportunity when our logo got covered.

The team saw that opportunity leaned in and made that into a big moment for the brand. By turning that on social media, it is our, you know, most viewed social media campaign.

We are up to a billion press impressions. And we even took that through and taken that through our flagship stores around the world and covering logos.

And we just launched t shirts in a matter of weeks. So it just shows the power of, you know, this culture of being fat and agile and really maximizing the moment.

So we will continue to find those type of moments in addition to this year, we are running our behind every originals campaign We are excited about what that is doing for the business. And while that is a global campaign, we are also bringing that local.

So I think a great example is Rosé, who is K pop star, was part of is part of that campaign, We have now developed a collaboration with her in our Asian markets. And I think you were just talking to our teams in Asia.

They would say that is absolutely fueling the business. Especially with women by doing pop ups, the product collaborations, etcetera.

So last I would say to this is we are a brand led company. it is an important part of our winning equation, along with product and execution, and we will continue to you know, have this be a big part of what we do going forward, but the team's doing an outstanding job.

Thank you. Thanks, Dana.

Great. Thank you so much.

My question is on the ERP implementation. You have made great progress.

More progress. It sounds like it is going to be happening through the middle of next year.

Can you just talk about when that process is finished, what it unlocks for the company, especially as you know, continue to move toward this DTC-first led business and what kind of impact might it have on margins when the ERP is implemented? Time with the, you know, the distribution centers up and running the way, you know, you planned?

Thank you.

The I would say, you know, I am very bullish. On this.

I was the executive sponsor for a couple of years. And you know, when I first joined the company 13 years ago, you know, we had 9 ERPs.

People said, let's get to 1 ERP. You know, when I saw the bill, I said it is too much to spend, let's work in turning around the business and growing the top line first.

So that is what we focused on. But the fact of the matter is the team's done a phenomenal job.

And it is a collaborative process. it is not just run by technology.

it is business led technology enabled. And it is, you know, removing from a very disjointed customized ERP system to standardize ERP system that is on the cloud.

Right? And it is important to take the you know, and take it to the cloud versus keeping it on premises.

The success of the project, Jay, the way we have defined it, and this is something that the board and we partnered was the following. This is this is about unlocking data.

it is about ensuring that the users get access to data and get access to data online, you know, on time and on a regular basis example. You know, if you think about our stores, or you think about the data cent the distribution center, on a screen on my iPad, I can see the movement of goods happening you know, as they happen.

Right? what is the fill rate?

what is the service? what is happening in the sales?

That was something we are not able to do. And now we can do North America.

We can see what is happening in Asia. And to your question of when does this all complete, it probably is slated to complete by middle of 27.

The fact that you know, we have got this far now complete without any major hiccups is a is a good thing. And so the size of the prize is we get there.

You know, you all have said when you change your fiscal calendar, at least once we have an ERP, we have the foundation to get that to at least think through that and make that happen very quickly. So that is really how we are thinking.

And it really helps us leverage AI. Because of the data unlock.

Got it. Thank you so much.

Thanks. Yeah.

Thank you.

Hi. This is Suraj Malhotra on for Rick Patel.

Thank you for taking our question. So how much were AUR and units up in 2Q?

And can you double click on the AUR drivers as we think about the split between pricing, promotions, and sales mix? Thanks.

Suraj. So the good news is both were You know, 1 of the things that, you know, we had this wonderful growth office I led,, I think the this sustainable growth is driven, in my humble view, and our humble view as a team, by driving both.

And given that you know, we are underpenetrated in the in the new TAM that Matthew asked about, I think driving unit growth will drive market share. So as you think of the quarter, 2 thirds of the growth was contributed by units.

And a third by AUR. If you did take last quarter, I think it is more 50/50.

Our expectation for the year is more 50/50. You take 2025, I think it was 2-thirds units and a third AUR.

And so what is benefiting the AUR, is your question? A couple of things.

1 is higher mix of full price selling. You know, we are focused on that.

Continued growth in DTC because DTC has higher AURs than wholesale. Trentin premium offerings like BlueTab, BlueTab is at a higher price point than Red Tab.

And category expansion in areas like women's. So that is broadly-- those are broad factors that contribute to AUR growth.

But I think you know, you should expect to see more of a balance from us between units and AUR. Great.

Thank you very much for the color. Thank you.

How are you guys doing? Hey, Michelle.

Hey, Harmit. Hi.

2 questions. How you doing?

2 questions for me on margin. I probably do Harmit.

So first, on the current quarter or sorry, the second quarter, revenue is 300 basis points better but op margin only hits the high end of your guide. So I am surprised there was a little more flow-through.

Could you maybe talk about maybe any puts and takes that happened during the quarter? And then, Harmit, the third quarter guide I get, the implied fourth quarter on margin implies a pretty meaningful step up in expense leverage.

I think it is implying margins up 150 to 200. And that is gross margins kind of similar.

3Q to 4Q. So it is all in the expense base.

So can you help walk us through kind of the like what are the moving pieces in SG&A that creates that scalability when you get to the fourth quarter? Maybe versus the third quarter, second quarter?

Thanks.

Suraj. So to your question about Q2, yes, you are right.

Revenue is strong. Gross margins were really strong.

You know, gross margins were up. And I think that was despite I think, you know, a slight drag on because of FX.

SG&A was up 6.5 percent, a little more largely driven by FX. A third of the SGNA increase was contributed by FX.

And, you know, we did lever. I mean, we-- yeah.

You are right. We were in the top end of a range of 8% to 9%.

But we did lever EBIT expanded 70 basis points. If you think of the first half, because you have this Q1 spend on advertising, The first half, and I will answer your question.

EBIT margins were probably up 30 basis points just for A&P. And in the second half, the EBIT expansion is driven largely by--.

1 is volume leverage. So volume in the second half is probably in dollar terms.

Probably 5 you know, as you think about the seasonality, between first half and second half, it is about 5% more in the second half of the year. that is number 1.

A&P is in between first half and the second half, is half a point lower, largely because of the Q1 spend. And, essentially, this is skewed towards Q4.

So Q4, you will see A&P lower than a year ago. And the distribution expenses, you know, we have announced the closure of Hebron.

You know, notice has been sent so it is happening. And that is between H2 and H1.

Is probably half a point better And that is, again, essentially happening in Q4. Now if you look at the Q4 P&L, you know, let's say, circa about 14% EBIT, you go back to 2024, our EBIT margins in Q4 were approximately 14%.

Only reason I do not go back to last year is because last year, tariffs the impact of tariffs, which was up, I think, a little over 100 basis points, really dragged the EBIT margins. And so Q4 2024 is a good proxy for Q4 26.

But you know, at the different aspects, those are the things that are probably skewing Q4. Does that answer your question?

Ike, because this is an important question you ask. Yeah.

So you are saying that the reason why you get so much more scale and the margin could be closer to 14% in the fourth quarter is because there is leverage on the A&P there is leverage on distribution. And the tariff kind of rolls off and reverse little bit.

Are those are the main ones? Okay.

Those are the tags you started spot on. And sales are slightly Q4 is slightly, you know, you know, seasonality was slightly better, slightly stronger.

So you leverage your fixed cost. So those are the 4 factors.

And you have you have you have captured it. Okay.

Thank you.

2 questions, actually. The first 1 is on tariffs.

I know last quarter you outlined a benefit of $35 million to COGS and $0.07 to EPS for the full year. If lower rates persisted.

So curious if any of that benefit did show up in 2Q and what you would expect for the third quarter. I know it is not included in guidance, but that you probably have a bit more visibility into that now, And the second question was just on the U.S.

DC transition? You mentioned that taking maybe a bit longer than anticipated, and I was wondering if you could elaborate on the timing and magnitude of cost savings that you would expect now versus what you were initially anticipating for 26?

Thanks.

Suraj. So, Tariff, I will break it up into 2 parts, Kendall, to your question.

1 is tariff refunds. You know, that of $80 million, we have just started applying because most of our refunds go through the reconciliation process.

And they just defined their window, you know, a week or so ago. And so we have not built that into our internally.

We have not incorporated into our internal results. We are not incorporating it in our guidance, but, you know, it is it is substantial.

We have not figured out what to do with it. Right?

Because you know, that will depend on the environment and a whole bunch of things. To your question about the 35 million hour guidance does not assume that.

that. there is a little bit of you know, the way it works is given that our inventory turns are you know, are close to 2x.

It takes a while when you bought inventory at a higher cost for that to turn out. And so our view is Q2 was marginal.

Q3 will be a little bit. And if it is, it will be, you know, an upside to our numbers, but it is very difficult.

The reason we did not incorporate this is largely because the conversation on tariffs is a little fluid. there is expectation that the tariffs go back.

You know, closer to the 19-20%. Level late July.

And so rather than, you know, give a number and keep changing it, we just thought it prudent to just keep the tariff rates at 38% for China and 20% for the rest of the world. Thank you.

And to your question on distribution, the distribution costs at the end of H1 were about a 20 basis-point benefit. You have seen what is happening in Europe.

You know, your and a few months into it. it is largely an omnichannel setup.

it is leveraging the P&L as well as really helping us service the demand. I think to a question about US, the slight delay is, you know, we said we would start tapering it off.

You know, in Q3, you know, which is, you know, looking at closing Hebron in towards the beginning of the second half. The demand has been really strong.

You can see that from the year's results. So our decision is to start the tapering off as the quarter progresses, quarter 3.

You know, close Hebron by the end of quarter 3. And move things to, you know, to our center in Groveport in Ohio.

The cost is a couple of million dollars. Kendall, it is not a lot.

But you know, it is the right call and to ensure that the demand is served. And the fact that we have given the intent given notice, is indicated that we are serious about it.

Appreciate the color. Thanks.

Hi. Good afternoon.

And Hi, Bob. Just wanted to add, you know, the World Cup marketing has been spectacular.

With San Francisco Stadium. Hey.

Thank you. So much.

Really well done. I guess the 2 questions that I have, sort of is number 1 is when you think about where you guys have brought the BlueTab business, you know, what have you learned now, you know, as you have expanded it, as you have, you know, rolled it out a bit more?

I guess the second question is more higher level is within the denim category itself, you know, are you seeing any changes to the promotional environment for the category?

Yes. Why do not we start with denim category overall?

And know, so your specific question around promotional environment, I mean, we are obviously staying very close to this. But I think to our remarks earlier, our consumer is proving to be resilient.

I think all the newness we are bringing the value we offer, we are durable. So I think that plays in as well as all the newness and innovation.

So even if it gets promotional, we will always stay close. But you have heard it.

I mean, 2-thirds of our increase was around unit growth, only a third on pricing. And even pricing a lot of that is driven around our premiumization strategy, less promo.

We have less promo online as an example, more full price selling. So we will always stay very close to the market and the consumer.

But overall, we are feeling confident and hence why we felt good about increasing our guide for the rest of the year. I would also say, by the way, as it relates to the denim category overall, Historically, this has been a pretty stable category.

Right? it is been part of the wardrobe staple for hundreds of years as long as we have been around and we invented it.

You know, there are times where you get fluctuations and changes in fits and styles. We drive a lot of that.

And it is fueling the growth. And I think what is really exciting is that if you look out, well, first of the Dun and category has been growing, number 1.

Number 2, we are gaining share. And number 3, it is expected to grow over the next 5 years and even outpace apparel.

Feeling really good about denim category. And then beyond that, we are making this big pivot to head-to-toe denim lifestyle, which is increasing our addressable market by the tune of 15x.

So these categories that were newer in, like, a full assortment of tops, for example, nondenim bottoms, that just presents a ton of runway for us ahead, and it is it is fueling our growth. So I think overall, we are feeling quite bullish on the denim category, and how we will play in that market.

Your second question on BlueTab, also very optimistic about this. I mean, as the denim leader, we should have our fair share of the premium denim segment.

And we are significantly under shared in this category. We are really just getting going.

If you think about it, I mean, we have had versions of premium denim over time. But now we have created a complete kind of sub brand opportunity, what we call Denim Luxury, which is truly the pinnacle expression of all things Levi's denim at higher levels were commanding price points, like in bottoms $200 to $350.

Truckers and outerwear, $250 on up. And we love what we are seeing.

I mean, it was up 40% in the first quarter, up 40% again this quarter, relatively small business, today, but there is no reason why this cannot be $100 million, $200 million-plus over time So I would just say stay tuned. The consumer is responding to your questions specifically on what are we learning.

I would say, number 1, we are learning that it does not have to be just denim and denim bottoms. So what you will see from us coming out later this year is a much more robust lifestyle assortment in you know, bottoms and tops and sweaters, in shirting, etcetera.

So stay tuned. And then secondly, we are still learning how to merchandise it.

You know, where does it live in the store? How do we create the looks?

So, both in our stores and online. But a lot of opportunity.

We are optimistic. Thank you.

Thanks, Bob. Thank you.

Thanks. it is Tracy Kogan filling in for Paul.

I just wanted to follow-up on the question about quarter to date performance. I think you said you are seeing continued momentum quarter to date, and I was not sure if you could clarify.

Did you mean it is similar to where it was in 2Q? Or is it currently in line with your 4% to 5% guidance for the quarter?

Thanks.

Hello, Tracy. Yeah, as you know, I have to say this.

This is which is we do not provide intraquarter updates. What I can tell you is that the business trend continues to support our third quarter outlook.

And full year guidance. You know, we have not seen any meaningful change in demand remains healthy, and that is why we have our expectations is we are close to your balance between AUR and unit.

And the growth is largely you know, broad based. With I know there is some concern about Europe.

that is why you know, I just want to close by saying the prebooks in Europe for the second half is encouraging. And the support that mid-single-digit growth for Europe for the year.

Got it. Thank you, guys.

Thank you. Thank you.

Thanks, Latif. Thanks, everyone, for joining the call.

Wishing everyone a great summer, and we look forward to connecting again in October. Thank you.