About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Financial Data and Key Metrics Changes - The company reported a strong start to 2025 with organic net revenue growth of 9%, exceeding expectations across sales, margins, and EPS [9][10][48] - Gross margin reached a record 62.1%, up from 58.2% in Q1 2024 and 56.5% in Q1 2023, driven by lower product costs and higher full-price selling [48][49] - Adjusted diluted EPS was 38 cents, up 52% year-over-year, reflecting strong financial performance [51] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) revenue grew 12%, driven by positive comp growth and strong e-commerce performance [10][29] - The wholesale business also showed positive growth, up 5%, with U.S. wholesale specifically up 9% [10][36] - Women's business grew 12% overall, now representing 38% of net revenues, while tops grew 7% [20][26][90] Market Data and Key Metrics Changes - The U.S. business grew 8%, while international markets saw a 9% increase [11][38] - The Americas segment reported an 11% increase in net revenues, with strong performance in both DTC and wholesale channels [54] - Asia's net revenues increased by 10%, with double-digit growth in key markets like Japan and Korea [57] Company Strategy and Development Direction - The company is focused on becoming a DTC-first brand, with plans to increase DTC revenue to 55% of total business [35][66] - The strategy includes expanding product offerings beyond jeans to lifestyle categories, with significant growth in women's and tops segments [20][22] - The company aims to navigate the dynamic macro environment by leveraging its strong brand and global supply chain [12][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by recent tariff announcements but expressed confidence in the company's ability to adapt [12][60] - The company is currently assessing various scenarios and mitigation strategies related to tariffs [60][64] - Full-year guidance remains unchanged, with expectations for organic net revenue growth of 3.5% to 4.5% in Q2 [62] Other Important Information - The company closed 21 net stores but opened 30 new stores, primarily full-price Levi's brand locations [52] - The company returned $81 million to shareholders through dividends and share buybacks, reflecting a commitment to shareholder value [53] Q&A Session Summary Question: Can you provide a percentage breakdown of sourcing by key countries and discuss potential pricing strategies? - Management indicated they source from 28 countries, with key suppliers in Bangladesh, Cambodia, and Vietnam, and emphasized the brand's pricing power while considering surgical price adjustments [69][74] Question: How are you planning inventory levels going forward on wholesale orders? - Inventory levels were reported as healthy, with no changes in wholesale orders from customers, and global wholesale was up 5% [80][85] Question: What are the key drivers of the 9% organic growth? - Growth was driven by strength across all geographies and channels, with DTC up 12% and wholesale up 5%, indicating sustainable demand [96][100] Question: Can you clarify the guidance for Q2 organic net revenue growth by region? - Guidance for Q2 suggests low to mid-single-digit growth in the U.S. and mid-single-digit growth in Europe and Asia, with DTC expected to grow in the high single digits [112][113] Question: Can you walk us through the expense deleverage expected in Q2? - SG&A expenses are expected to increase in Q2, with a focus on maintaining a strong balance sheet and managing costs effectively [121][122]

Core Insights - Levi Strauss reported $1.53 billion in revenue for the quarter ended February 2025, reflecting a year-over-year decline of 2% [1] - The company's EPS for the same period was $0.38, an increase from $0.26 a year ago, resulting in an EPS surprise of +35.71% compared to the consensus estimate of $0.28 [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $1.54 billion, indicating a surprise of -0.95% [1] Revenue Breakdown - Geographic Revenues in the Americas reached $783 million, exceeding the estimated $735.66 million, representing a year-over-year increase of +6.4% [4] - Geographic Revenues in Europe totaled $400 million, falling short of the average estimate of $411.06 million, marking a year-over-year decline of -5.4% [4] - Geographic Revenues in Asia amounted to $308 million, surpassing the estimated $280.87 million, with a year-over-year increase of +6.6% [4] - Total Levi's Brands Net Revenues were reported at $1.49 billion, exceeding the average estimate of $1.43 billion [4] Stock Performance - Shares of Levi Strauss have returned -15.7% over the past month, compared to a -12.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Levi Strauss reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, and showing an increase from $0.26 per share a year ago, representing a 35.71% earnings surprise [1][2] Financial Performance - The company posted revenues of $1.53 billion for the quarter ended February 2025, which was 0.95% below the Zacks Consensus Estimate and a decrease from $1.56 billion year-over-year [2] - Over the last four quarters, Levi Strauss has surpassed consensus EPS estimates four times but has only topped revenue estimates once [2] Stock Performance - Levi Strauss shares have declined approximately 19.7% since the beginning of the year, compared to a 13.7% decline in the S&P 500 [3] - The current Zacks Rank for Levi Strauss is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $1.42 billion, and for the current fiscal year, it is $1.27 on revenues of $6.27 billion [7] - The trend of estimate revisions for Levi Strauss is mixed, which may change following the recent earnings report [6] Industry Context - The Retail - Apparel and Shoes industry, to which Levi Strauss belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Reported net revenues for Q1 2025 were $1.5 billion, up 3% year-over-year, with organic net revenues increasing by 9%[3] - The Levi's® brand saw an 8% increase in organic revenues globally, while DTC (Direct-to-Consumer) net revenues rose 12% on an organic basis[3] - For the three months ended March 2, 2025, net revenues increased to $1,526.8 million, up from $1,480.2 million in the same period last year, representing a growth of approximately 3.1%[28] - Total net revenues for the three months ended March 2, 2025, were $1,526.8 million, an increase of 3.1% compared to $1,480.2 million for the same period in 2024[72] - Total net revenues for the year ended December 1, 2024, reached $6,032.0 million, with the fourth quarter contributing $1,749.9 million[83] Profitability Metrics - Operating margin improved to 12.5%, with adjusted EBIT margin increasing by 400 basis points to 13.4% compared to Q1 2024[6] - Diluted earnings per share from continuing operations were $0.35, a significant increase from a loss of $0.03 in Q1 2024[6] - Adjusted net income for Q1 2025 was $150 million, up 49% from $100 million in Q1 2024[5] - Gross profit for the same period was $947.6 million, compared to $869.8 million, indicating a significant increase of about 8.9%[28] - Net income from continuing operations was $140.2 million, compared to a loss of $9.8 million in the previous year, marking a notable recovery[28] - Adjusted diluted earnings per share for the quarter were $0.34, compared to a loss of $0.03 per share in the same quarter last year[28] - Adjusted EBIT for the three months ended March 2, 2025, was $204.0 million, representing a 47.2% increase from $138.6 million in the prior year[78] - Net income for the three months ended March 2, 2025, was $135.0 million, compared to a net loss of $10.6 million for the same period in 2024, representing a significant turnaround[31] - The net income margin from continuing operations for the three months ended March 2, 2025, was 9.2%, compared to a negative margin of (0.7)% in the prior year[49] Shareholder Returns - The company returned approximately $81 million to shareholders in Q1 2025, a 12% increase over the prior year[8] - The company declared a dividend of $0.13 per share, totaling approximately $51 million, payable on May 9, 2025[9] - The company repurchased $30.0 million of common stock during the quarter, compared to $25.0 million in the same period last year, reflecting ongoing capital return strategies[31] Inventory and Assets - Total inventories increased by 7% on a dollar basis, with the majority secured for U.S. orders for Q2[12] - Total current assets decreased to $2,651.5 million from $2,851.1 million, a decline of approximately 7%[26] - Total liabilities decreased to $4,163.7 million from $4,405.0 million, indicating a reduction of about 5.5%[26] - The company’s cash and cash equivalents were reported at $574.4 million, down from $690.0 million, a decrease of approximately 16.8%[26] - Inventories decreased to $1,073.2 million from $1,131.3 million, reflecting a reduction of about 5.1%[26] Tax and Expenses - The effective income tax rate for Q1 2025 was 20.6%, compared to 15.9% in Q1 2024[6] - The effective income tax expense for Q1 2025 was $36.4 million, compared to a tax benefit of $1.9 million in Q1 2024, highlighting changes in tax obligations[42] - Adjusted SG&A expenses for Q1 2025 were $743.6 million, a slight increase from $731.2 million in Q1 2024, with an adjusted SG&A margin of 48.7% compared to 49.4% in the prior year[37] Restructuring and Charges - The company is focusing on restructuring operations to achieve anticipated cost savings, although specific figures were not disclosed[18] - Goodwill impairment charges for Q1 2025 were $2.5 million, down from $5.5 million in Q1 2024, reflecting improved asset valuations[37] - Restructuring charges for Q1 2025 amounted to $6.7 million, significantly lower than $113.1 million in Q1 2024, indicating progress in restructuring initiatives[44] - Restructuring charges for the year amounted to $185.6 million, with the highest charge in the first quarter at $113.1 million[83] Market Performance - Organic net revenues increased by 8.6% to $1,524.5 million from $1,404.1 million year-over-year[72] - Organic net revenues in the Americas grew by 11.1% to $780.7 million, while Europe saw a modest increase of 2.9% to $400.5 million[72] - The DTC (Direct-to-Consumer) channel reported organic net revenues of $787.5 million, a 12.5% increase from $700.0 million in the prior year[74] - The Levi's brand generated organic net revenues of $1,432.8 million, an increase of 8.2% compared to $1,324.5 million in the previous year[76] Discontinued Operations - The company is in the process of selling its Dockers® business, which has been classified as discontinued operations as of March 2, 2025[82] - Discontinued operations generated net revenues of $323.3 million for the year, with the fourth quarter contributing $89.8 million[84]

Revenue Performance - In the first quarter of 2025, the company reported that pants, including jeans and casual pants, represented 69% of total units sold, compared to 66% in the first quarter of 2024[114]. - Men's products generated 61% of net revenues in the first quarter of 2025, while women's products accounted for 38%[114]. - Consolidated net revenues increased by 3.1% to $1,526.8 million for the three months ended March 2, 2025, compared to $1,480.2 million in the same period of 2024[131]. - Net revenues in the Americas increased by 6.4% to $783.0 million, with organic net revenues growth of 11.1%[133]. - Net revenues in Europe decreased by 5.4% to $400.5 million, but increased by 2.9% on an organic basis[133]. - Net revenues in Asia increased by 6.7% to $308.1 million, with organic net revenues growth of 10.0%[133]. - The Levi's brand net revenues increased by 3.4% to $1,432.8 million, with organic growth of 8.2%[133]. - Beyond Yoga net revenues increased by 9.8% to $35.2 million, with growth across both DTC and wholesale channels[141]. - Total net revenues for the three-month period ended March 2, 2025, were $1,526.8 million, a 3.1% increase from $1,480.2 million in the same period of 2024[220]. - Organic net revenues for the three-month period ended March 2, 2025, were $1,524.5 million, reflecting an 8.6% increase compared to $1,404.1 million in the prior year[220]. - The Americas segment reported organic net revenues of $780.7 million for the three-month period ended March 2, 2025, a significant increase of 11.1% from $702.8 million in the same period of 2024[220]. Profitability and Income - Net income from continuing operations was $140.2 million, a significant increase from a net loss of $9.8 million in the first quarter of 2024, driven by lower restructuring charges and higher gross profit[131]. - Adjusted EBIT rose by 47.2% to $204.0 million, with an Adjusted EBIT margin of 13.4%, up 400 basis points from the first quarter of 2024[131]. - Adjusted diluted earnings per share increased to $0.38 from $0.25 in the first quarter of 2024, reflecting higher adjusted net income[131]. - Adjusted net income for the three months ended March 2, 2025, was $150.0 million, compared to $100.4 million in 2024[196]. - Adjusted EBIT for the three months ended March 2, 2025, was $204.0 million, compared to $138.6 million in the same period of 2024[194]. - Adjusted EBITDA for the same period was $253.1 million, up from $182.1 million in 2024[194]. - The company reported a net income of $210.6 million for the full year 2024, with a diluted earnings per share of $0.52[236]. Costs and Expenses - The company incurred additional restructuring charges of $6.7 million and restructuring-related charges of $3.1 million in the first quarter of 2025[118]. - Selling, general and administrative (SG&A) expenses decreased by 0.9% to $749.3 million, representing 49.1% of net revenues, down from 51.1%[147]. - Interest expense increased to $10.9 million for the three-month period ended March 2, 2025, compared to $10.0 million in the prior year[162]. - The effective income tax rate rose to 20.6% for the three months ended March 2, 2025, up from 15.9% in the same prior-year period[164]. - The company incurred restructuring charges of $6.7 million related to Project Fuel for the three-month period ended March 2, 2025, down from $113.1 million in the same period of 2024[206]. - The company’s restructuring related charges, severance, and other for the three-month period ended March 2, 2025, amounted to $2.1 million, down from $10.1 million in the same period of 2024[201]. Strategic Initiatives - The company announced a strategic decision to discontinue the Denizen brand, with operations winding down during fiscal year 2024 and into 2025[113]. - The Dockers business was held for sale at the end of the first quarter of 2025 and reported as discontinued operations[119]. - The company initiated "Project Fuel," a multi-year global productivity initiative aimed at optimizing operations and reducing costs, beginning in 2024[117]. - The company is in the process of selling its Dockers business, targeting completion of the transaction in fiscal year 2025[235]. - The company aims to increase its direct-to-consumer business revenue portion, focusing on digital presence and operational excellence to enhance speed-to-market[244]. - The company is focused on optimizing its operating model and achieving cost savings from its global productivity initiative[244]. - The company plans to expand its number of dedicated stores and improve profitability through new store openings[244]. - The company is integrating Beyond Yoga into its operations as part of future acquisitions and investments strategy[244]. Financial Position and Liquidity - Total liquidity position, including unused credit facility and cash equivalents, was approximately $1.4 billion as of March 2, 2025[168]. - The company plans to return 55-65% of Adjusted free cash flow to stockholders through dividends and share repurchases[166]. - Total debt as of March 2, 2025, was $993.5 million, with 100% being fixed-rate debt[175]. - Cash provided by operating activities decreased to $52.5 million for the three months ended March 2, 2025, down from $286.0 million in the same period of 2024, primarily due to higher inventory spending and SG&A expenses[172]. - Cash used for investing activities was $71.1 million for the three months ended March 2, 2025, slightly lower than $71.7 million in 2024[173]. - Cash used for financing activities increased to $97.5 million in 2025 from $94.5 million in 2024, driven by higher dividend payments and stock repurchases[174]. - Adjusted free cash flow for the three-month period ended March 2, 2025, was $(14.1) million, a decrease from $214.4 million in the same period of 2024[214]. Market and Economic Conditions - The company's international business contributed 57% of net revenues in the first quarter of 2025, down from 59% in the same period of 2024[115]. - The company expects new tariffs announced on April 2, 2025, to have a material impact on its results of operations in fiscal year 2025[116]. - The company anticipates that inflation and macroeconomic pressures may adversely affect revenues, operating margins, and net income[120]. - The company faces potential increases in import tariffs and the impact of ongoing geopolitical tensions, which could affect consumer spending and pricing trends[242]. - The company is aware of the impact of inflation, foreign currency exchange, and interest rate fluctuations on its financial results[244]. Shareholder Returns - The company is committed to increasing total shareholder returns through capital allocation priorities, including share repurchases and dividends[244]. - A cash dividend of $0.13 per share was declared, totaling approximately $51 million, payable on May 9, 2025[170]. - The company repurchased 1.6 million shares for $30.0 million during the three months ended March 2, 2025[170].

Core Viewpoint - Telsey Advisory Group analyst Dana Telsey maintains an Outperform rating on Levi Strauss & Co with a price forecast of $23.00, anticipating a slight increase in EPS for Q1 FY2025 [1] Financial Performance - Levi Strauss is expected to report Q1 FY2025 EPS of $0.28, an increase from $0.26 last year, aligning with consensus estimates [1] - Revenue for Q1 FY2025 is projected to decline by 1.3% year-over-year to $1.537 billion, slightly below the consensus estimate of $1.542 billion [2] - For FY2025, reported revenue is expected to decline by 1%-2% from $6.355 billion in FY2024, while organic revenue is projected to grow by 3.5%-4.5% [3] Margins and Profitability - Gross margin is estimated to improve by 180 basis points to 60.0%, slightly exceeding the 59.9% consensus [2] - Operating margin is expected to reach 10.4%, up from 9.0% last year, in line with consensus projections [2] - Levi's EBIT margin projections indicate potential upside, despite conservative revenue and EPS forecasts due to foreign exchange headwinds [6] Strategic Initiatives - The company is streamlining operations by exiting non-core businesses, including Denizen and European footwear, and preparing to sell Dockers to enhance profitability and reduce revenue volatility [7] - Levi expects tariffs to provide a competitive advantage, with less than 1% of imports coming from China, down from historical levels of 15%-16% [4] Market Position - The company rebounded in Q4 FY2024 with strong revenue growth after previous misses, achieving record gross margins without increased promotions [5] - Levi is well-positioned long-term, benefiting from a stabilizing U.S. denim market, growing direct-to-consumer sales, and product innovation [6]

Core Insights - Wall Street analysts forecast Levi Strauss (LEVI) to report quarterly earnings of $0.28 per share, reflecting a year-over-year increase of 7.7%, while revenues are expected to be $1.54 billion, indicating a decline of 1% compared to the previous year [1] Earnings Estimates - Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter, indicating stability in analysts' forecasts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts estimate 'Geographic Revenues- Americas' at $735.66 million, a year-over-year change of -0.1% [5] - 'Geographic Revenues- Europe' is projected to reach $411.06 million, reflecting a decline of 2.8% from the year-ago quarter [5] - The consensus estimate for 'Geographic Revenues- Other Brands' stands at $109.58 million, indicating a year-over-year increase of 0.5% [5] - 'Geographic Revenues- Asia' is expected to be $280.87 million, showing a decline of 2.8% year-over-year [6] Stock Performance - Levi Strauss shares have experienced a change of -1% in the past month, compared to the Zacks S&P 500 composite's -5.3% move, suggesting a relatively stable performance [7] - With a Zacks Rank 3 (Hold), LEVI is anticipated to closely follow overall market performance in the near term [7]

Company Overview - Levi Strauss & Co is an American clothing company known for its denim jeans, particularly the Levi's brand, and was founded in 1853 [3] - The company re-entered public markets in 2019, trading on the New York Stock Exchange under the ticker symbol LEVI [1] Stock Performance - The stock debuted at an opening price of $22 but is currently trading below $19, indicating struggles to gain momentum over the past five years [2] - LEVI is valued at $7 billion with a Forward PE of 14, holding Zacks Style Scores of "A" in Growth, "D" in Momentum, and "C" in Value [4] Recent Earnings - In Q4, Levi Strauss reported better-than-expected earnings, beating EPS by 4%, but guided for FY25 earnings below consensus, projecting adjusted EPS between $1.20 and $1.25 compared to the $1.36 expected by analysts [5] - Revenue is expected to decline by 1% to 2% year-over-year, despite improvements in profitability with a 13.4% adjusted EBIT margin and a 61.3% gross margin [6] Earnings Estimates - Since the earnings report, analysts have lowered earnings estimates for the current quarter by 15%, from $0.33 to $0.28, and for the current year by 8%, down from $1.39 to $1.27 [7] - Projections for the next year have also been adjusted downward by 5%, now at $1.39 from $1.47 [7] Technical Analysis - The stock is trading below its IPO debut price, which is a troubling sign indicating negative growth and lack of investor confidence [8][10] - Current trading levels show the stock below the 200-day moving average at $19 but above the 50-day moving average at $17.80 [9] Summary of Challenges - Levi Strauss faces significant challenges with its stock performance, recent earnings reports, and downward revisions to earnings estimates suggesting a lack of investor confidence [10]

Company Performance - Levi Strauss (LEVI) closed at $17.48, down 1.74% from the previous trading day, underperforming the S&P 500 which fell by 0.27% [1] - Over the last month, Levi's shares increased by 2.3%, lagging behind the Retail-Wholesale sector's gain of 8.91% and the S&P 500's gain of 4.27% [1] Earnings Projections - The upcoming earnings per share (EPS) for Levi Strauss is projected at $0.28, indicating a 7.69% increase year-over-year [2] - Revenue for the same quarter is estimated at $1.54 billion, reflecting a 1.04% decline compared to the previous year [2] Full Year Estimates - For the full year, earnings are projected at $1.27 per share and revenue at $6.27 billion, showing changes of +1.6% and -1.29% respectively from the prior year [3] - Recent analyst estimate revisions suggest a positive outlook for the company's business trends [3] Valuation Metrics - Levi Strauss has a Forward P/E ratio of 14.05, which is lower than the industry average of 14.97 [6] - The company has a PEG ratio of 1.83, compared to the industry average PEG ratio of 1.13 [6] Industry Context - The Retail - Apparel and Shoes industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 72, placing it in the top 29% of over 250 industries [7] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [7]