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 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]

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]

Core Insights - Levi Strauss reported revenue of $1.84 billion for the quarter ended November 2024, marking a 12% increase year-over-year and exceeding the Zacks Consensus Estimate by 7.11% [1] - The company's EPS for the quarter was $0.50, up from $0.44 in the same quarter last year, surpassing the consensus estimate of $0.48 by 4.17% [1] Revenue Breakdown - Geographic Revenues in the Americas reached $995.40 million, exceeding the average estimate of $935.03 million, representing a 12.1% year-over-year increase [4] - European revenues were reported at $434.10 million, above the average estimate of $427.21 million, reflecting a 14.5% increase compared to the previous year [4] - Revenues from Other Brands totaled $123.70 million, compared to an average estimate of $482.02 million, showing a 9.5% year-over-year increase [4] - Asian revenues amounted to $286.50 million, surpassing the average estimate of $263.66 million, with a 9.4% increase year-over-year [4] - Total net revenues for Levi's Brands were $1.72 billion, exceeding the average estimate of $1.60 billion [4] Stock Performance - Levi Strauss shares have returned +6.1% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Levi Strauss (LEVI) reported quarterly earnings of $0.50 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, and up from $0.44 per share a year ago, representing an earnings surprise of 4.17% [1] - The company achieved revenues of $1.84 billion for the quarter ended November 2024, surpassing the Zacks Consensus Estimate by 7.11% and increasing from $1.64 billion year-over-year [2] - Levi Strauss has outperformed the S&P 500 with a 6.1% gain since the beginning of the year compared to the S&P 500's 3.2% gain [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $1.6 billion, and for the current fiscal year, it is $1.36 on revenues of $6.45 billion [7] - The estimate revisions trend for Levi Strauss is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Retail - Apparel and Shoes industry, to which Levi Strauss belongs, is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]