Levi beats earnings estimates but expects pressure this year from strong U.S. dollar

Core Insights - Levi Strauss issued disappointing guidance for the current fiscal year, expecting sales to decline between 1% and 2%, contrary to estimates of 3.7% growth [1] - The company anticipates adjusted earnings per share to be between $1.20 and$1.25, below the expected $1.37 [1] Financial Performance - For the fiscal fourth quarter, Levi reported net income of$182.6 million, or 46 cents per share, compared to $126.8 million, or 32 cents per share, a year earlier [2] - Adjusted net income was$202 million, or 50 cents per share, up from $179 million, or 44 cents per share, a year earlier [2] - Sales rose to$1.84 billion, a 12% increase from $1.64 billion a year earlier, with organic sales growing 8% [3] Market Trends - Sales in the Americas grew 12%, Europe increased 15%, and Asia expanded 9% during the quarter [7] - Direct-to-consumer sales increased 19%, accounting for 45% of total organic net sales [7] - Wholesale revenues grew 7% during the quarter, despite softness in the industry [7] Strategic Initiatives - CEO Michelle Gass has focused on cutting underperforming business segments and enhancing profitability [4] - The company has launched a marketing partnership with Beyoncé, which has positively impacted demand across the business [5] - Women's apparel now constitutes about 36% of Levi's overall business, with a goal to increase this to 50% over time [5] Supply Chain and Tariff Concerns - Levi sources products from 25 countries, with less than 1% coming from China, minimizing exposure to proposed tariffs [10] - The company imports about 5% of products from Mexico and none from Canada, reducing tariff risk [10] - Levi plans to work with suppliers to minimize consumer price impacts if tariffs are implemented [11][12]