Levi Strauss & (US:LEVI)2025-04-07 20:06Revenue 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].