Financial Data and Key Metrics Changes - In Q3, the company achieved a net revenue growth of 7%, with international markets contributing approximately 75% of this growth and the U.S. contributing 25% [17][18] - Gross margin reached a record 61.7%, expanding 110 basis points year-over-year, despite an 80 basis point headwind from tariffs [19][20] - Adjusted EBIT margin was 11.8%, with adjusted diluted EPS at $0.34, both exceeding expectations and reflecting a year-to-date growth of approximately 25% [21][28] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) sales increased by 9%, with a strong performance in both stores and online, while wholesale net revenues grew by 5% [11][13] - Women's business grew by 12% year-to-date, while men's business saw a solid growth of 5% in Q3 [9][10] - The tops category experienced notable growth, with overall tops up 9% for the quarter and 10% year-to-date [82] Market Data and Key Metrics Changes - The U.S. market grew by 3%, while international business saw a 9% increase, driven by strong performance in Asia [6][14] - In Europe, net revenues were up 3%, with key markets like the U.K. showing high mid-teen growth [22][33] - Asia's net revenues accelerated to a 12% increase, with double-digit growth in both DTC and wholesale channels [22][23] Company Strategy and Development Direction - The company is pivoting to a DTC-first strategy, focusing on becoming a head-to-toe denim lifestyle retailer, which is expected to drive growth [5][7] - Continued investment in impactful marketing campaigns and strategic partnerships is aimed at enhancing brand relevance and expanding market share [6][8] - The company is also focusing on premiumization efforts, with the rollout of the elevated Blue Tab collection [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum, citing a strong product pipeline and effective marketing strategies [6][16] - Despite a complex macro environment, management anticipates continued strong performance and growth opportunities, particularly in international markets [16][28] - The company raised its full-year revenue and EPS guidance, reflecting optimism about future performance [17][27] Other Important Information - The company returned $151 million to shareholders in Q3, marking a 118% increase year-over-year, and declared a dividend of $0.14 per share, up 8% from the previous year [23][24] - Inventory levels were up 12% in dollar terms, driven by investments ahead of the holiday season and higher product costs due to tariffs [24] Q&A Session Summary Question: European momentum and pre-books for next spring - Management noted that Europe grew 3% in Q3, with strong performance in key markets and positive pre-book trends for spring [31][32] Question: Momentum entering the season and demand trends - Management confirmed no material change in demand trends, emphasizing strong underlying business momentum [41][42] Question: Wholesale business growth drivers - Growth in the wholesale channel was primarily driven by existing accounts responding positively to the expanded product pipeline [65][66] Question: Sustainability of low single-digit growth in the Americas - Management expects continued positive growth in DTC, while U.S. wholesale may see a decline due to strong prior year comparisons [70][72] Question: Lifestyle offering growth rates and AUR opportunities - The tops business saw significant growth, with management confident in further expanding this category and improving average unit retail (AUR) [80][84]

Financial Data and Key Metrics Changes - In Q3, the company reported a net revenue growth of 7%, with international markets contributing approximately 75% of this growth and the U.S. contributing 25% [17][18] - Gross margin reached a record 61.7%, expanding 110 basis points year-over-year, despite an 80 basis point headwind from tariffs [19][20] - Adjusted EBIT margin was 11.8%, with adjusted diluted EPS at $0.34, both exceeding expectations [21] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) sales grew 9%, driven by strong performance in both stores and online, with e-commerce up 16% [11][12] - Women's business grew 12% year-to-date, while men's business grew 5% [9][10] - The tops category saw notable growth, with overall tops up 9% and women's tops up 8% [81] Market Data and Key Metrics Changes - The U.S. market grew 3%, while international business was up 9%, led by double-digit growth in Asia [6][14] - In Europe, net revenues increased by 3%, with strong performance in the UK [22] - Asia's net revenues accelerated to up 12%, with double-digit growth in both DTC and wholesale [22] Company Strategy and Development Direction - The company is pivoting to a DTC-first strategy, focusing on becoming a head-to-toe denim lifestyle retailer [5][7] - Continued investment in marketing campaigns and strategic partnerships is aimed at enhancing brand relevance and expanding market share [6][7] - The company is also focusing on premiumization efforts, rolling out the Blue Tab premium collection [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum despite a complex external environment, citing strong consumer demand and effective strategies [16][45] - The company anticipates continued growth in the denim category and plans to leverage its market leadership to capture more share [42][45] - For Q4, the company expects organic net revenue growth of approximately 1%, with reported net revenues down about 3% due to non-comparable items [26][27] Other Important Information - The company returned $151 million to shareholders in Q3, a 118% increase year-over-year, and declared a dividend of $0.14 per share, up 8% [23][24] - Inventory levels were up 12% in dollar terms, driven by investments ahead of the holiday season [24] Q&A Session Summary Question: European momentum and Q4 guidance - Management noted that Europe grew 3% in Q3, with strong performance in key markets like the UK and Germany, and expects mid-single-digit growth for the year [32][33] - Q4 guidance reflects the impact of the 53rd week and tariffs, with a conservative approach due to macro uncertainties [35] Question: Momentum entering the season - Management confirmed no material change in demand trends, emphasizing strong positioning for the holiday season [41][42] Question: Wholesale business growth drivers - Growth in the wholesale channel was driven by existing accounts responding positively to fashion fits, with women's business outperforming [65][66] Question: SKU rationalization and inventory management - The company has reduced SKUs by about 15% compared to last year while expanding its lifestyle assortment, leading to higher productivity per SKU [74][75]

Financial Data and Key Metrics Changes - In Q3, the company achieved a net revenue growth of 7%, with international markets contributing approximately 75% of this growth and the U.S. contributing 25% [17] - Gross margin reached a record 61.7%, expanding 110 basis points year-over-year, despite an 80 basis point headwind from tariffs [18][19] - Adjusted EBIT margin was 11.8%, with adjusted diluted EPS at $0.34, both exceeding expectations [21] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) sales increased by 9%, driven by strong performance in both stores and online, with e-commerce growing 16% [12][13] - Women's business grew 12% year-to-date, while men's business grew 5% [9] - The bottoms business saw a 6% increase, and tops grew 9% overall, with notable strength in women's tops [10][70] Market Data and Key Metrics Changes - The U.S. market grew 3%, while international business was up 9%, led by double-digit growth in Asia [5][14] - In Europe, net revenues increased by 3%, with strong performance in the UK [22] - Asia's net revenues accelerated to a 12% increase, driven by double-digit growth in key markets like India, Japan, and Korea [22] Company Strategy and Development Direction - The company is pivoting to a DTC-first strategy, focusing on becoming a head-to-toe denim lifestyle retailer [4][6] - Continued investment in impactful marketing campaigns and strategic partnerships is expected to drive brand momentum [5][6] - The company aims to expand its addressable market by defining and owning the denim lifestyle category [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum, citing a strong product pipeline and robust consumer demand [5][16] - Despite a complex macro environment, the company anticipates a strong finish to 2025 and continued growth into 2026 [16][28] - The company is taking a prudent approach to its Q4 outlook, expecting organic net revenue growth of approximately 1% [26] Other Important Information - The company returned $151 million to shareholders in Q3, a 118% increase year-over-year, and declared a dividend of $0.14 per share, up 8% [23][24] - Inventory levels were up 12% in dollar terms, driven by investments ahead of the holiday season [24] Q&A Session Summary Question: European momentum and Q4 guidance - Management noted that Europe grew 3% in Q3, with strong performance in key markets and positive pre-booking for spring [31][32] - Q4 guidance reflects a conservative approach due to the complex macro environment, with expected gross margin impacts from tariffs and the absence of a 53rd week [34] Question: Momentum entering the season and demand trends - Management confirmed no material change in demand trends, emphasizing strong positioning in the denim category [39][40] Question: Wholesale business growth drivers - Growth in the wholesale channel was driven by existing accounts responding positively to fashion fits, with new distribution points contributing as well [55] Question: Inventory management and SKU rationalization - The company has reduced SKUs by about 15% compared to last year while expanding its lifestyle assortment [63][64]

Financial Data and Key Metrics Changes - The company aims for $10 billion in revenue with operating margins of 15% as part of its strategic vision [6] - Gross margins have improved from 57% three years ago to over 62% currently, indicating strong brand momentum [59][60] - Direct-to-consumer (DTC) sales have increased from 40% to 50% of total sales over the past few years, contributing to higher operating margins [11][22] Business Line Data and Key Metrics Changes - The company has exited low-margin businesses such as Denizen and Dockers to focus on Levi's and Beyond Yoga, which are expected to drive growth [7][8] - The tops business has seen a 16% increase in sales, indicating strong performance in this category [26] - Non-denim products now account for 40% of the business and are growing, with new offerings like performance tech and denim skirts [18] Market Data and Key Metrics Changes - The global denim market is valued at approximately $100 billion and is expected to grow in the mid-single-digit range [15] - The company has experienced resilience in consumer spending, particularly among consumers earning over $100,000 [43] - International markets, especially Europe and Asia, have shown strong growth, contributing to overall performance [44] Company Strategy and Development Direction - The company is transitioning to a DTC-first strategy while maintaining a significant wholesale presence [6][22] - There is a focus on becoming a denim lifestyle brand, expanding offerings beyond traditional denim products [12][19] - The company plans to open 50 to 60 new stores annually over the next five years, aiming to increase its global footprint [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth despite potential macroeconomic challenges, citing strong product offerings and marketing strategies [46] - The second half of the year is expected to be more modest due to stronger comparisons from the previous year and tariff impacts [44] - The company is optimistic about its ability to navigate tariff challenges and maintain market share through effective pricing strategies [50][54] Other Important Information - The partnership with Beyoncé has been successful, contributing to brand momentum, and future marketing efforts will focus on sports events [36][40] - The company has launched a loyalty program with over 40 million consumers, aiming to expand its customer base significantly [48] - Inventory levels are healthy, with a mid-teen percentage increase driven by preparations for the second half of the year [56][57] Q&A Session Summary Question: What has driven the most momentum in the business? - Management highlighted the transformation towards a higher growth and margin profile, focusing on DTC and exiting low-margin businesses [6][7] Question: How does the company view the denim cycle and its impact? - The denim category is large and growing, with casualization trends driving demand, although the company is diversifying its offerings [15][19] Question: What is the outlook for the wholesale environment? - Wholesale growth is expected to be modest, with opportunities in underpenetrated areas like women's and tops [32][33] Question: How is the company navigating potential anti-American sentiment? - Management reported no significant anti-American sentiment affecting the brand, emphasizing strong local relationships [47][48] Question: What are the expectations regarding tariffs? - The company anticipates manageable tariff impacts and is working on strategies to mitigate these costs [50][51] Question: What is the outlook for inventory growth? - Inventory was up mid-teens in Q2, primarily due to tariff preparations, but is considered healthy overall [56][57] Question: How does the company plan to leverage SG&A costs? - Management is focused on improving EBIT margins and leveraging fixed costs as the business grows [62][65]