Financial Data and Key Metrics Changes - In 2025, the company achieved organic net revenue growth of 7%, with total company revenues increasing by 5% in Q4, following an 8% growth in the previous year [5][7][21] - Adjusted EBIT margin contracted by 100 basis points to 12.1% due to tariffs and higher distribution costs, while gross margin for the quarter was 60.8%, down 100 basis points year-over-year [22][24] - Adjusted diluted EPS for Q4 was $0.41, exceeding expectations despite a $0.03 headwind from a higher tax rate [24] Business Line Data and Key Metrics Changes - The Levi's brand grew 7% for the year, with DTC (Direct-to-Consumer) sales increasing by 11%, now comprising approximately half of total business [6][13] - Women's business accelerated by 11%, while men's grew by 5% [7][10] - The wholesale channel grew by 4%, supported by an expanded lifestyle assortment [6][7] Market Data and Key Metrics Changes - The Americas net revenues increased by 2%, with U.S. DTC growing by 6% [25][26] - Europe saw a 10% increase in net revenues, driven by strong performance in the U.K. and Germany [26][70] - Asia's net revenues grew by 4%, with key markets like Japan and Turkey showing double-digit growth [27] Company Strategy and Development Direction - The company is transitioning to a DTC-first model, focusing on becoming a head-to-toe denim lifestyle retailer [5][6] - Plans to expand the Blue Tab collection, targeting the premium segment, which is largely underpenetrated [11][75] - The company aims to enhance operational efficiency through AI and improved supply chain management [15][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a dynamic global environment, emphasizing strong brand equity and consumer connection [17][35] - For 2026, the company expects organic net revenue growth of 4%-5%, with a reported growth of 5%-6% [28][32] - The company anticipates continued margin expansion and improved profitability through strategic investments and operational efficiencies [21][30] Other Important Information - The company returned $55 million to shareholders in Q4, with a total of $363 million for the year, including a 7% increase in dividends [25] - The company is implementing a new global selling model to enhance consumer engagement and operational efficiency [14][62] Q&A Session Summary Question: About gross margins and guidance - The company has a history of consistent gross margin expansion and expects to offset tariff impacts with higher pricing and full-price selling [37][39] Question: Outlook for organic growth compared to the denim category - Management is confident in outperforming the denim category, with a focus on expanding the total addressable market beyond denim bottoms [50][51] Question: Direct-to-consumer channel margins - There is significant upside potential in DTC margins through sales productivity and improved retail excellence [60][62] Question: Performance in Europe and impact of Blue Tab - Europe had a strong year with mid-single-digit growth, and the Blue Tab collection is seen as a significant opportunity in the premium market [68][75] Question: Supply chain improvements - The company is making progress in shortening go-to-market timelines and enhancing global consistency in product development [82][84]