Market Performance - The small-cap Russell 2000 has outperformed major indexes recently, leading for the 4th session in the last 5, with a gain of +0.48% [1] - The Dow increased by +192 points (+0.43%), the S&P 500 rose by +17 points (+0.27%), and the Nasdaq was up by +19 points (+0.09%) [1] - Over the past month, the Russell 2000 has gained +5%, while other major indexes have hovered around +4% [2] Company Earnings - Levi Strauss & Co. reported fiscal Q2 earnings of 22 cents per share, exceeding the estimated 14 cents, with revenues of $1.4 billion surpassing the projected $1.37 billion [4] - The gross margins for Levi Strauss hit a record +62.6% for the quarter, with Americas' comps up +5%, net revenues in Europe up +14%, and Asia flat [4] - Direct-to-Consumer sales increased by +11% in the quarter, contributing to a +7% jump in stock price following the earnings report [4] Economic Outlook - No significant economic reports or earnings reports are expected on the following Friday, with attention turning to the upcoming Consumer Price Index (CPI) data and Q2 earnings from major banks [5] - Major banks are anticipated to perform well, with assets under management at record highs and strong investment banking performance [6] - The CPI Inflation Rate was reported at a 12-month low of +2.3%, with core inflation at +2.8%, close to the Fed's optimal target of +2.0% [6]

Financial Data and Key Metrics Changes - The company reported a 9% increase in organic net revenue for Q2, marking the third consecutive quarter of high single-digit growth [7][33] - Gross margin reached a record 62.6%, expanding 140 basis points year-over-year, driven by lower product costs and a favorable channel mix [36][38] - Adjusted diluted EPS increased by 37% year-over-year to $0.22 [38] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) sales grew by 10%, with 13 consecutive quarters of positive comparable sales growth [7][22] - The wholesale business also saw growth, up 7%, with notable performance in Europe [7][33] - Women's business grew by 13%, while men's business increased by 6% [33] Market Data and Key Metrics Changes - The Americas net revenues were up 9%, with operating margins increasing to 20.5% [39] - Europe experienced a 15% increase in net revenues, with a 17.2% operating margin [40] - Asia's net revenues were flat due to strategic actions taken to improve structural economics, but DTC grew double digits in several markets [41] Company Strategy and Development Direction - The company is transitioning to a DTC-first model, with over half of its business now coming from owned and operated channels [9][11] - A focus on becoming a full head-to-toe apparel lifestyle brand is evident, with significant growth in lifestyle categories [9][10] - The company is narrowing its focus by divesting from non-core brands like Dockers, allowing for a more concentrated effort on the Levi's brand [10][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a challenging global operating environment, citing strong brand equity and consumer connection [11][30] - The company raised its full-year guidance for organic net revenue growth to 4.5% to 5.5% [45] - Despite uncertainties around tariffs, the company believes it is well-positioned to manage potential impacts [44][50] Other Important Information - The company opened 16 net new stores in Q2, expanding its global store network [24] - The loyalty program has nearly 40 million members, contributing to increased consumer engagement and higher average unit retail (AUR) [25] - The company expects to return at least $100 million from the net proceeds of the Dockers sale to shareholders through share repurchases [42] Q&A Session Summary Question: Drivers of demand strength and market share gains - Management noted broad-based growth across all business segments and maintained a top market share position globally and in the U.S. [53][56] Question: Clarification on organic wholesale revenues - Management indicated a prudent approach to wholesale, expecting it to remain flat to slightly positive for the year, with growth driven by digital channels and premium customers [66][70] Question: Marketing initiatives and price increases - The company is investing in brand marketing and has exciting campaigns planned for the fall, with room for further AUR growth across categories [75][80] Question: Margin profile of DTC business - DTC margins have improved significantly, with a focus on revenue per square foot and cost management contributing to this positive trend [95][99] Question: Tariff assumptions and pricing strategy - The company has factored in additional tariffs into its guidance and is implementing strategies to mitigate their impact [103][44]

Market Trends & Performance - The S&P 500 and NASDAQ Composite closed at record highs, while the Dow was up around 200 points [2] - Nvidia's market capitalization closed above $4 trillion for the first time [3] - Tech sector lagged, while financials and healthcare led [3][4] - Goldman Sachs and Bank of America raised their S&P 500 targets, indicating continued rally momentum [5] Company Specifics - Levi Strauss's stock rose nearly 8% in after-hours trading after a stellar report, with the stock up more than 30% this year [29] - Levi Strauss's adjusted earnings per share were 22 cents versus an expected 13 cents, and revenue was $1.45 billion versus an expected $1.37 billion [30][31] - Levi Strauss is raising its outlook, expecting net revenue to increase by 1% to 2% compared to a previous decline of 1% to 2%, and adjusted earnings per share are expected to be between $1.25 and $1.30 [33] - JP Morgan was upgraded to outperform, trading at a 12% to 13% premium, with an ROE of 20% last year [41] - Morgan Stanley was upgraded, with high teens ROE that's repeatable and with limited volatility [47] - Samsung debuted its newest foldable phones, the Galaxy Z Fold 7 and Galaxy Z Flip 7, with the Fold 7 being 42% thinner [54][56] Economic Outlook & Tariffs - TIAA Wealth Management, with over $1.3 trillion in assets under management, suggests limited S&P 500 upside in the second half due to an expected economic slowdown [8][10] - The economy is expected to slow down to 1% to 1.5% growth, which is not yet factored into earnings estimates [14] - US tariffs on imports from China are assumed to remain at 30%, with the rest of the world at 10% for the remainder of the year [33] - Current tariff rates are effectively at 14%, significantly higher than the 2.5% at the beginning of the year [18][19] Investment Strategies & Fixed Income - TIAA Wealth Management advises clients to have a diversified asset class structure and diversified income sources [22] - Financials are expected to perform well due to deregulation and productivity, and certain parts of the market leveraged to the AI capex theme are favored [24] - Global diversification is recommended, as tariffs force other countries to invest in themselves [25] - A diversified basket of high-quality fixed income securities can yield 5% to 6%, depending on the duration [27]

Financial Data and Key Metrics Changes - The company reported a 9% organic net revenue growth in Q2, marking the third consecutive quarter of high single-digit growth [9][35] - Gross margin reached a record 62.6%, expanding 140 basis points year-over-year, driven by lower product costs and a favorable channel mix [38] - Adjusted diluted EPS increased by 37% to $0.22 compared to the prior year [40] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) sales grew by 10%, with 13 consecutive quarters of positive comparable sales growth [9][32] - The wholesale business also saw growth, up 7%, marking its third consecutive quarter of growth [32][35] - Women's business grew by 13%, while men's business increased by 6% [35] Market Data and Key Metrics Changes - The Americas net revenues were up 9%, with operating margins increasing to 20.5% [41] - Europe experienced a 15% increase in net revenues, with a 17.2% operating margin [42] - Asia's net revenues were flat, but DTC grew double digits, indicating strong performance in specific markets like Japan and Turkey [44] Company Strategy and Development Direction - The company is transitioning to a DTC-first model, with over half of its business now coming from owned and operated channels [10][12] - Strategic focus has shifted towards the Levi's brand, with the sale of Dockers and exiting the Denizen and footwear businesses [11][30] - The company aims to become a $10 billion company, emphasizing growth in lifestyle categories beyond denim [12][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a challenging global operating environment, citing strong brand equity and consumer connection [12][54] - The company raised its full-year guidance for organic net revenue growth to 4.5% to 5.5% [48] - Management highlighted the importance of brand marketing and collaborations, such as with Nike and Beyoncé, to maintain cultural relevance [14][82] Other Important Information - The company generated free cash flow of $146 million and declared an 8% increase in dividends to $0.14 per share [45] - Inventory levels increased by 15%, primarily to support holiday sales and mitigate tariff impacts [46] Q&A Session Summary Question: Drivers of demand strength and market share gains - Management noted broad-based growth across DTC and wholesale, with strong performance in both men's and women's categories [58][64] Question: Gross margin inflection and structural changes - Management highlighted that higher DTC sales, focus on women's products, and exiting less profitable lines contributed to improved gross margins [65][68] Question: Organic wholesale revenues and growth expectations - Management indicated a prudent approach to wholesale growth, expecting it to remain flat to slightly positive for the year [73][75] Question: Marketing initiatives and AUR growth - Management discussed ongoing marketing efforts, including collaborations and campaigns, which are expected to drive brand strength and AUR growth [82][84] Question: DTC margin profile and SG&A rate - Management confirmed that DTC growth is no longer a drag on EBIT margins, with significant improvements in revenue per square foot and cost management [99][100]

Financial Performance - Levi Strauss adjusted earnings per share beat expectations by 22 cents [1] - Levi Strauss revenues exceeded expectations at 145 billion dollars [1] - Operating margin reached 75%, surpassing the street's expectation of 6% [2] - Gross margin slightly exceeded analyst expectations at 626% [2] Business Strategy & Growth - Direct-to-consumer revenues increased by 11%, now accounting for 50% of net revenues [2] - Wholesale revenues increased by 3% [3] Future Outlook - The company is raising its full-year top and bottom-line guidance, incorporating the impact of tariffs [3] - The company assumes tariffs will remain at approximately 30% on China and 10% for the rest of the world [3] - The company is raising its dividend to 14 cents per share [3] Market Reaction - Shares are moving higher by almost 85% in response to Levi's results [3]

Levi raised its revenue outlook, with the maker of 501 jeans expecting sales growth to outweigh the impact of Donald Trump’s tariffs https://t.co/ZbRQJrAxry ...

Core Viewpoint - Levi Strauss raised its revenue guidance, leading to an 8% increase in its stock price after hours [1] Group 1 - The company has adjusted its revenue forecast upwards, indicating positive growth expectations [1] - The stock price reaction reflects investor confidence following the guidance update [1]

[Q2 2025 Financial Performance Overview](index=1&type=section&id=Levi%20Strauss%20%26%20Co.%20Reports%20Second-Quarter%202025%20Financial%20Results) [Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) Levi Strauss & Co. reported a **strong second quarter** for 2025, with **significant growth in revenue and profitability**, driven by the success of its strategic initiatives, particularly its DTC-first model. The company demonstrated broad-based strength, leading to an **increase in its full-year financial outlook** despite anticipated tariff impacts Q2 2025 Key Performance Indicators | Metric | Q2 2025 Performance | YoY Change | | :--- | :--- | :--- | | Reported Net Revenues | **$1.4 billion** | **+6%** | | Organic Net Revenues | - | **+9%** | | Gross Margin | **62.6%** (**Record**) | **+140 bps** | | Adjusted EBIT Margin | **8.3%** | **+190 bps** | | Adjusted Diluted EPS | **$0.22** | **+37%** | - CEO Michelle Gass stated that the **strong quarter** is **clear evidence of the company's strategic agenda gaining traction**, as it **transforms into a denim lifestyle brand and a best-in-class DTC retailer**[2](index=2&type=chunk) - CFO Harmit Singh announced an **increase in the full-year revenue and EPS forecast**, attributing the company's **inflection** to a **focus on the core Levi's® brand and its DTC-first strategy**, which is creating a **higher growth and margin profile**[2](index=2&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company's revenue growth was propelled by strong performance in the Americas and Europe. The Direct-to-Consumer (DTC) channel was a **key driver**, growing **11%** and now comprising **50%** of total net revenues. Gross and operating margins **expanded significantly**, benefiting from **lower product costs and favorable channel mix** Regional and Channel Growth | Region/Channel | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **By Region** | | | | Americas | **+5%** | **+9%** | | Europe | **+14%** | **+15%** | | Asia | **-1%** | **0%** | | **By Channel** | | | | DTC | **+11%** | **+10%** | | Wholesale | **+3%** | **+7%** | - The Direct-to-Consumer (DTC) channel now represents **50%** of the company's total net revenues for the second quarter[3](index=3&type=chunk) - Gross margin increased by **140 basis points** to a **record 62.6%**, primarily driven by **lower product costs and a favorable channel mix**[6](index=6&type=chunk) Operating and Net Income Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Margin | **7.5%** | **1.5%** | | Adjusted EBIT Margin | **8.3%** | **6.3%** | | Net Income (Continuing Ops) | **$80 million** | **$17 million** | | Adjusted Net Income | **$89 million** | **$65 million** | | Diluted EPS (Continuing Ops) | **$0.20** | **$0.04** | | Adjusted Diluted EPS | **$0.22** | **$0.16** | [Balance Sheet and Shareholder Returns](index=3&type=section&id=Balance%20Sheet%20and%20Shareholder%20Returns) As of June 1, 2025, the company maintained a **strong liquidity position** with approximately **$1.5 billion**. It continued to return capital to shareholders, increasing its Q2 dividend payout by **8%** year-over-year and announcing a further dividend increase for Q3 2025 - The company held **$654 million** in cash and cash equivalents and maintained total liquidity of approximately **$1.5 billion**[13](index=13&type=chunk) - Total inventories saw a **15%** increase on a dollar basis compared to the previous period[13](index=13&type=chunk) - In Q2, the company returned approximately **$51 million** to shareholders via a dividend of **$0.13** per share. For Q3, the dividend has been increased to **$0.14** per share[8](index=8&type=chunk)[9](index=9&type=chunk) - The company has **$560 million** remaining under its current share repurchase authorization, with no expiration date[9](index=9&type=chunk) [Fiscal 2025 Outlook (Updated)](index=3&type=section&id=Updated%20Fiscal%202025%20Guidance) Reflecting **strong first-half performance**, Levi Strauss & Co. has **raised its full-year 2025 guidance**. The company now expects **higher net revenue growth** and has **increased its adjusted diluted EPS range**, even after factoring in a **20 basis point** impact from tariffs Fiscal 2025 Guidance Comparison | Metric | Updated FY2025 Guidance | Previous FY2025 Guidance | | :--- | :--- | :--- | | Reported Net Revenue Growth | **1%** to **2%** | (**1%**) to (**2%**) | | Organic Net Revenue Growth | **4.5%** to **5.5%** | **3.5%** to **4.5%** | | Adjusted EBIT Margin | **11.4%** to **11.6%** | Maintained | | Adjusted Diluted EPS | **$1.25** to **$1.30** | **$1.20** to **$1.25** | - The updated guidance assumes U.S. tariffs on imports from China will remain at **30%** and from the rest of the world at **10%** for the remainder of the year[10](index=10&type=chunk) [Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=9&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of June 1, 2025, total assets stood at **$6.53 billion**, a slight increase from **$6.38 billion** at the end of fiscal 2024. This was primarily due to a rise in inventories to **$1.25 billion**. Total liabilities remained stable at **$4.44 billion**, resulting in an increase in total stockholders' equity to **$2.09 billion** Consolidated Balance Sheet Highlights | Balance Sheet Item ($ millions) | June 1, 2025 | Dec 1, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | **653.6** | **690.0** | | Inventories | **1,248.9** | **1,131.3** | | **Total Assets** | **6,533.2** | **6,375.5** | | Total current liabilities | **1,979.8** | **2,010.5** | | Long-term debt | **1,033.7** | **994.0** | | **Total Liabilities** | **4,443.2** | **4,405.0** | | **Total Stockholders' Equity** | **2,090.0** | **1,970.5** | [Consolidated Statements of Income](index=11&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the second quarter of 2025, the company reported a **significant improvement in profitability**. Net revenues grew to **$1.45 billion**, driving gross profit to **$905.8 million**. Operating income surged to **$108.0 million**, and net income from continuing operations increased more than fourfold to **$79.6 million**, or **$0.20** per diluted share Consolidated Statements of Income Highlights | Income Statement Item ($ millions) | Three Months Ended June 1, 2025 | Three Months Ended May 26, 2024 | | :--- | :--- | :--- | | Net revenues | **1,446.0** | **1,358.8** | | Gross profit | **905.8** | **832.4** | | Operating income | **108.0** | **20.9** | | Net income from continuing operations | **79.6** | **17.2** | | Diluted EPS from continuing operations | **$0.20** | **$0.04** | [Consolidated Statements of Cash Flows](index=12&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first six months of fiscal 2025, net cash from operating activities was **$238.0 million**, a decrease from **$548.8 million** in the prior-year period. The company utilized **$129.7 million** for investing activities, mainly for capital expenditures, and **$152.4 million** for financing activities, including dividends and stock repurchases Consolidated Statements of Cash Flows Highlights | Cash Flow Item ($ millions) | Six Months Ended June 1, 2025 | Six Months Ended May 26, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | **238.0** | **548.8** | | Net cash used for investing activities | (**129.7**) | (**141.4**) | | Net cash used for financing activities | (**152.4**) | (**162.9**) | | Net (decrease) increase in cash | (**36.4**) | **242.6** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=13&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) [Overview of Non-GAAP Measures](index=13&type=section&id=Overview%20of%20Non-GAAP%20Measures) The company employs non-GAAP financial measures like Adjusted EBIT, Adjusted Net Income, and Organic Net Revenues to offer investors a clearer perspective on its **core operational performance**. These metrics, which exclude items such as restructuring charges, currency impacts, and divestiture effects, are **integral to management's financial and operational decision-making** - The company uses non-GAAP measures to supplement GAAP results, providing additional information on financial performance, enhancing understanding of past performance and future prospects, and **increased transparency**[17](index=17&type=chunk)[18](index=18&type=chunk) - Key non-GAAP measures include Adjusted SG&A, Adjusted EBIT, Adjusted Net Income, Adjusted Diluted EPS, Organic Net Revenues, and Adjusted Free Cash Flow[38](index=38&type=chunk) [Reconciliation of Adjusted EBIT and Net Income](index=15&type=section&id=Reconciliation%20of%20Adjusted%20EBIT%20and%20Net%20Income) For Q2 2025, Adjusted EBIT rose **39%** to **$119.3 million** from **$86.0 million** YoY, while Adjusted Net Income increased **35%** to **$88.5 million**. The primary adjustments from GAAP figures involved excluding restructuring charges (**$6.8 million**) and related costs (**$4.5 million**) associated with the 'Project Fuel' initiative, providing a clearer view of ongoing operational profitability Adjusted EBIT and Net Income Reconciliation | Q2 2025 Reconciliation ($ millions) | GAAP Measure | Adjustments | Non-GAAP Measure | | :--- | :--- | :--- | :--- | | Operating Income / Adjusted EBIT | **108.0** | **+11.3** | **119.3** | | Net Income (Cont. Ops) / Adjusted Net Income | **79.6** | **+8.9** | **88.5** | - Key adjustments for Q2 2025 include **$6.8 million** in restructuring charges and **$4.5 million** in restructuring-related charges, primarily related to the 'Project Fuel' initiative[46](index=46&type=chunk)[51](index=51&type=chunk)[58](index=58&type=chunk) [Reconciliation of Organic Net Revenues](index=20&type=section&id=Reconciliation%20of%20Organic%20Net%20Revenues) In Q2 2025, total organic net revenue growth was **8.8%**, outpacing the reported **6.4%** growth. This performance was driven by strong organic growth in Europe (**+14.6%**) and the Americas (**+8.9%**), as well as the DTC channel (**+10.3%**). The core Levi's® brand achieved **9.1%** organic growth. The adjustments account for currency fluctuations and prior-year divestitures Q2 2025 Growth | Q2 2025 Growth | Reported | Organic | | :--- | :--- | :--- | | **Total Net Revenues** | **6.4%** | **8.8%** | | Americas | **5.1%** | **8.9%** | | Europe | **14.0%** | **14.6%** | | Asia | (**0.9%**) | **0.2%** | | Wholesale Channel | **2.7%** | **7.3%** | | DTC Channel | **10.5%** | **10.3%** | | Levi's® Brand | **7.4%** | **9.1%** | - The variance between reported and organic revenue growth is attributed to the impact of foreign currency exchange rates and the divestitures of the Denizen® and Footwear businesses in the prior year[83](index=83&type=chunk) [Other Non-GAAP Reconciliations](index=18&type=section&id=Other%20Non-GAAP%20Reconciliations) The company's trailing four-quarter Return on Invested Capital (ROIC) improved significantly to **17.7%** from **14.0%** year-over-year, indicating **more efficient capital deployment**. Adjusted Free Cash Flow for the first six months was **$131.9 million**. On a constant-currency basis, Q2 Adjusted EBIT grew **41.9%**, demonstrating **strong underlying business momentum** - Adjusted Free Cash Flow for the six months ended June 1, 2025, was **$131.9 million**, compared to **$437.0 million** in the same period last year[76](index=76&type=chunk) - Return on Invested Capital (ROIC) for the trailing four quarters increased to **17.7%** as of June 1, 2025, up from **14.0%** a year prior[81](index=81&type=chunk) Constant-Currency Growth Rates | Q2 2025 Constant-Currency Growth | YoY Growth | | :--- | :--- | | Adjusted EBIT | **41.9%** | | Adjusted Net Income | **35.3%** | | Adjusted Diluted EPS | **37.5%** |

Part I [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's financial statements for the period ending June 1, 2025, reflect revenue growth and a significant increase in net income compared to the prior year, largely driven by improved gross margins and lower restructuring charges, with total assets increasing to **$6.53 billion** and the Dockers® business classified as discontinued operations [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 1, 2025, total assets were **$6.53 billion**, an increase from **$6.38 billion** at the end of fiscal 2024, driven by higher inventories and other non-current assets; total liabilities remained relatively stable at **$4.44 billion**, while total stockholders' equity increased to **$2.09 billion** from **$1.97 billion** Key Balance Sheet Items (in millions) | Balance Sheet Item | June 1, 2025 | December 1, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $653.6 | $690.0 | | Inventories | $1,248.9 | $1,131.3 | | Total current assets | $2,929.1 | $2,851.1 | | Total assets | $6,533.2 | $6,375.5 | | Long-term debt | $1,033.7 | $994.0 | | Total liabilities | $4,443.2 | $4,405.0 | | Total stockholders' equity | $2,090.0 | $1,970.5 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, net revenues increased to **$1.45 billion** from **$1.36 billion** year-over-year, with net income from continuing operations rising substantially to **$79.6 million** from **$17.2 million**, driven by higher gross profit and lower restructuring charges Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $1,446.0 | $1,358.8 | $2,972.8 | $2,839.0 | | Gross profit | $905.8 | $832.4 | $1,853.4 | $1,702.2 | | Operating income | $108.0 | $20.9 | $299.6 | $21.5 | | Net income from continuing operations | $79.6 | $17.2 | $219.8 | $7.3 | | Net income | $67.0 | $18.0 | $202.0 | $7.3 | | Diluted EPS (Continuing Operations) | $0.20 | $0.04 | $0.55 | $0.02 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash provided by operating activities decreased to **$238.0 million** from **$548.8 million** in the prior year, while net cash used for investing activities was **$129.7 million** and for financing activities was **$152.4 million** Cash Flow Summary - Six Months Ended (in millions) | Cash Flow Activity | June 1, 2025 | May 26, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $238.0 | $548.8 | | Net cash used for investing activities | ($129.7) | ($141.4) | | Net cash used for financing activities | ($152.4) | ($162.9) | | Net (decrease) in cash | ($36.4) | $242.6 | | Ending cash and cash equivalents | $653.6 | $641.4 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the definitive agreement to sell the Dockers® business, now a discontinued operation, the ongoing "Project Fuel" restructuring initiative, and disaggregated revenue data showing growth in the DTC channel - The company entered into a definitive agreement to sell its Dockers® business, which is now classified as discontinued operations; the transaction is expected to close in two phases, on July 31, 2025, and January 31, 2026[27](index=27&type=chunk)[47](index=47&type=chunk) - The Denizen® brand was discontinued, with the wind-down substantially complete as of March 2, 2025[27](index=27&type=chunk) - The "Project Fuel" restructuring initiative incurred charges of **$6.8 million** and **$13.5 million** for the three and six months ended June 1, 2025, respectively[72](index=72&type=chunk) - Dividends of **$0.13 per share** were declared in both January and April 2025, with a subsequent dividend of **$0.14 per share** declared for Q3 2025[85](index=85&type=chunk)[87](index=87&type=chunk) [Management's Discussion and Analysis (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports a **6.4%** increase in Q2 2025 net revenues, driven by growth in Americas and Europe, improved gross margin to **62.6%**, and the sale of the Dockers® brand, maintaining strong liquidity of approximately **$1.5 billion** [Overview and Key Factors](index=27&type=section&id=Overview%20and%20Key%20Factors) Levi Strauss & Co., primarily driven by the Levi's® brand, is diversified across wholesale and DTC channels, with key factors including the pending Dockers® sale, the "Project Fuel" initiative, and macroeconomic pressures - The company has entered into a definitive agreement to sell its Dockers® business, which is now reported as discontinued operations[119](index=119&type=chunk) - The "Project Fuel" initiative, a multi-year global productivity plan, is underway to optimize operations and reduce costs, resulting in restructuring charges of **$6.8 million** in Q2 2025[120](index=120&type=chunk) - Key business risks include potential tariffs on products from Asia, macroeconomic pressures affecting consumer spending, foreign currency volatility, and evolving tax legislation like Pillar Two[121](index=121&type=chunk) Revenue Mix - First Six Months of 2025 | Category | % of Net Revenues | | :--- | :--- | | International Business | 57% | | Levi's® Brand | ~94% | | DTC Channel | 51% | | Wholesale Channel | 49% | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q2 2025 net revenues grew **6.4%** to **$1.45 billion**, with gross margin expanding to **62.6%** due to lower product costs, and operating income surging to **$108.0 million** from **$20.9 million** due to revenue growth, margin expansion, and significantly lower restructuring charges Net Revenues Growth by Segment & Channel (Q2 2025 vs Q2 2024) | Segment/Channel | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Total** | **6.4%** | **8.8%** | | Americas | 5.1% | 8.9% | | Europe | 14.0% | 14.6% | | Asia | (0.9)% | 0.2% | | Beyond Yoga® | 11.9% | 11.9% | | Wholesale | 2.7% | 7.3% | | DTC | 10.5% | 10.3% | - Gross margin for Q2 2025 increased to **62.6%** from **61.3%** year-over-year, primarily due to lower product costs, favorable channel mix, and higher full-priced sales[146](index=146&type=chunk)[147](index=147&type=chunk) - SG&A expenses increased **4.6%** to **$791.0 million** in Q2 2025, but decreased as a percentage of revenue to **54.7%** from **55.7%** year-over-year[133](index=133&type=chunk)[148](index=148&type=chunk) Operating Income by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Americas | $153.3 | $126.5 | | Europe | $69.4 | $53.3 | | Asia | $29.6 | $33.9 | | Beyond Yoga® (loss) | ($4.4) | ($2.9) | | **Total Operating Income** | **$108.0** | **$20.9** | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position of approximately **$1.5 billion**, with capital allocation priorities focused on reinvestment, dividends, and share repurchases, having paid **$102.8 million** in dividends and repurchased **$30.5 million** of stock in the first half of 2025 - Total liquidity position as of June 1, 2025, was approximately **$1.5 billion**[170](index=170&type=chunk) - Capital allocation priorities are: 1) reinvestment in the business, 2) returning capital to stockholders via dividends (target **25-35%** payout ratio) and share buybacks, and 3) pursuing strategic acquisitions[168](index=168&type=chunk) - In the first six months of 2025, the company used cash for **$102.8 million** in dividend payments and **$30.5 million** in common stock repurchases[176](index=176&type=chunk) - Cash provided by operating activities decreased to **$238.0 million** for the first six months of 2025 from **$548.8 million** in the prior year, primarily due to higher spending on inventory and incentive payments[174](index=174&type=chunk) [Non-GAAP Financial Measures](index=42&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBIT and Adjusted Net Income to provide a clearer view of underlying business trends, with Adjusted EBIT increasing **38.7%** to **$119.3 million** in Q2 2025 Reconciliation of Net Income to Adjusted EBIT (Q2 2025, in millions) | Metric | Amount | | :--- | :--- | | **Net income from continuing operations** | **$79.6** | | Income tax expense | $22.9 | | Interest expense | $11.8 | | Other (income) expense, net | ($6.3) | | Restructuring charges, net | $6.8 | | Restructuring related charges and other, net | $4.5 | | **Adjusted EBIT** | **$119.3** | Reconciliation of Diluted EPS to Adjusted Diluted EPS (Q2 2025) | Metric | Amount | | :--- | :--- | | **Diluted EPS from continuing operations** | **$0.20** | | Restructuring charges, net | $0.02 | | Restructuring related charges and other, net | $0.01 | | Tax impact of adjustments | ($0.01) | | **Adjusted diluted EPS** | **$0.22** | - Organic net revenues, which exclude currency impacts and divestitures, grew **8.8%** in Q2 2025, compared to reported growth of **6.4%**[225](index=225&type=chunk) [Market Risk Disclosures](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's primary market risk exposures or their management since the 2024 Annual Report on Form 10-K disclosures - There have been no material changes in primary market risk exposures from the information disclosed in the 2024 Annual Report on Form 10-K[254](index=254&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 1, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 1, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[255](index=255&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[256](index=256&type=chunk) Part II [Legal Proceedings & Risk Factors](index=55&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company is involved in various ordinary course legal proceedings not expected to have a material impact, and there have been no material changes to previously disclosed risk factors - The company does not believe any pending claims, complaints, and legal proceedings will have a material impact on its financial condition, results of operations, or cash flows[258](index=258&type=chunk) - There have been no material changes to the company's previously reported Risk Factors[259](index=259&type=chunk) [Share Repurchases and Equity Sales](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased during Q2 2025, with **$560.4 million** remaining under the share repurchase authority as of July 3, 2025, and no unregistered sales of equity securities occurred - No shares were repurchased during the second quarter of 2025[262](index=262&type=chunk) - The remaining share repurchase authority was **$560.4 million** as of July 3, 2025[262](index=262&type=chunk)

Group 1 - Levi Strauss & Co. is set to report its fiscal second-quarter earnings on July 10, 2025, with analysts projecting adjusted earnings of $0.13 per share on revenue of $1.37 billion, indicating a 19% decline in earnings year-over-year and a 5% decrease in sales compared to the previous year's figures of $0.16 per share and $1.44 billion in revenue [2] - The company has a current market capitalization of $7.8 billion, with revenue over the past twelve months at $6.3 billion, operational profits of $647 million, and net income of $356 million [3] - Levi's management anticipates organic revenue growth of 3.5%–4.5% in Q2, with gross margin expanding by 80–100 basis points, while projecting a revenue decline of 1%–2% for the entire year, excluding tariff effects [2] Group 2 - Historical data shows that LEVI's stock has tended to outperform following earnings announcements, with a 53% occurrence of positive one-day returns and a median one-day increase of 4.2% [2][5] - Over the last five years, there have been 17 earnings data points recorded, with 9 positive and 8 negative one-day returns, while the percentage of positive returns decreases to 33% when examining data from the last three years [5] - The correlation between short-term and medium-term returns following earnings can be analyzed to identify trading strategies, with a focus on pairs that exhibit the highest correlation [6][7]