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Levi Strauss & (LEVI) - 2025 Q1 - Quarterly Report
LEVILevi Strauss & (LEVI)2025-04-07 20:06
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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 1,526.8millionforthethreemonthsendedMarch2,2025,comparedto1,526.8 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 783.0million,withorganicnetrevenuesgrowthof11.1783.0 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 308.1million,withorganicnetrevenuesgrowthof10.0308.1 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 35.2million,withgrowthacrossbothDTCandwholesalechannels[141].−Totalnetrevenuesforthethree−monthperiodendedMarch2,2025,were35.2 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 1,480.2millioninthesameperiodof2024[220].−Organicnetrevenuesforthethree−monthperiodendedMarch2,2025,were1,480.2 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 1,404.1millionintheprioryear[220].−TheAmericassegmentreportedorganicnetrevenuesof1,404.1 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 702.8millioninthesameperiodof2024[220].ProfitabilityandIncome−Netincomefromcontinuingoperationswas702.8 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 9.8millioninthefirstquarterof2024,drivenbylowerrestructuringchargesandhighergrossprofit[131].−AdjustedEBITroseby47.29.8 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 0.38from0.38 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 150.0million,comparedto150.0 million, compared to 100.4 million in 2024[196]. - Adjusted EBIT for the three months ended March 2, 2025, was 204.0million,comparedto204.0 million, compared to 138.6 million in the same period of 2024[194]. - Adjusted EBITDA for the same period was 253.1million,upfrom253.1 million, up from 182.1 million in 2024[194]. - The company reported a net income of 210.6millionforthefullyear2024,withadilutedearningspershareof210.6 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 6.7millionandrestructuring−relatedchargesof6.7 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 749.3million,representing49.1749.3 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 10.0millionintheprioryear[162].−Theeffectiveincometaxrateroseto20.610.0 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 113.1millioninthesameperiodof2024[206].−Thecompany’srestructuringrelatedcharges,severance,andotherforthethree−monthperiodendedMarch2,2025,amountedto113.1 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 10.1millioninthesameperiodof2024[201].StrategicInitiatives−ThecompanyannouncedastrategicdecisiontodiscontinuetheDenizenbrand,withoperationswindingdownduringfiscalyear2024andinto2025[113].−TheDockersbusinesswasheldforsaleattheendofthefirstquarterof2025andreportedasdiscontinuedoperations[119].−Thecompanyinitiated"ProjectFuel,"amulti−yearglobalproductivityinitiativeaimedatoptimizingoperationsandreducingcosts,beginningin2024[117].−ThecompanyisintheprocessofsellingitsDockersbusiness,targetingcompletionofthetransactioninfiscalyear2025[235].−Thecompanyaimstoincreaseitsdirect−to−consumerbusinessrevenueportion,focusingondigitalpresenceandoperationalexcellencetoenhancespeed−to−market[244].−Thecompanyisfocusedonoptimizingitsoperatingmodelandachievingcostsavingsfromitsglobalproductivityinitiative[244].−Thecompanyplanstoexpanditsnumberofdedicatedstoresandimproveprofitabilitythroughnewstoreopenings[244].−ThecompanyisintegratingBeyondYogaintoitsoperationsaspartoffutureacquisitionsandinvestmentsstrategy[244].FinancialPositionandLiquidity−Totalliquidityposition,includingunusedcreditfacilityandcashequivalents,wasapproximately10.1 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 993.5million,with100993.5 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 71.7millionin2024[173].−Cashusedforfinancingactivitiesincreasedto71.7 million in 2024[173]. - Cash used for financing activities increased to 97.5 million in 2025 from 94.5millionin2024,drivenbyhigherdividendpaymentsandstockrepurchases[174].−Adjustedfreecashflowforthethree−monthperiodendedMarch2,2025,was94.5 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 214.4millioninthesameperiodof2024[214].MarketandEconomicConditions−Thecompany′sinternationalbusinesscontributed57214.4 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 51million,payableonMay9,2025[170].−Thecompanyrepurchased1.6millionsharesfor51 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].