In 2025, we delivered organic net revenue growth of 7%, which was broad-based across all facets of our business. Here are a few key highlights for the year. As a reminder, all numbers Harmit and I will reference are on an organic basis. First, the Levi's brand grew 7%. Levi's strengthened its standing as the number one denim brand in the world and today holds more market share than the next two global competitors combined. Second, we took a big step forward in our evolution to becoming a true lifestyle appa ...

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]

Summary of Levi Strauss & Co. FY Conference Call (September 16, 2025) Industry Overview - The denim category is valued at approximately $100 billion and is expected to grow in the mid-single digits moving forward [3][4] - The casual environment has significantly contributed to the growth of denim [3] Company Insights - Levi Strauss & Co. has been a market leader for 170 years and is focused on expanding the denim category [3] - The company has launched various denim styles, including a looser baggy fit, which currently represents about 15% of their product mix, while skinny and slim fits contribute 20% [4] - The company aims to become a $10 billion entity with a 15% operating margin over the next 12 to 18 months [6] Product Development and Marketing - The introduction of the Blue Tab premium category, inspired by Japanese denim, has been successful in both Asia and the U.S. [4][5] - Collaborations with influencers, such as Beyoncé, have positively impacted brand visibility and sales [5][6] - The company is expanding its Western wear offerings, which have seen increased demand [9][10] Direct-to-Consumer (DTC) Strategy - DTC now accounts for 50% of the company's business, up from 20% when the current leadership joined [12] - The company has experienced 13 consecutive quarters of positive comparable sales [16] - E-commerce has grown from 4% of total business pre-COVID to approximately 12% recently, with a target of reaching 15% [29] Financial Performance and Goals - Gross margin improved from less than 58% in 2023 to over 61% in 2024, driven by higher full-price sales and growth in DTC and international markets [38] - EBIT margins have increased from 9% to mid-11% over the past three years [39] - The company is focused on maintaining SG&A control to drive EBIT leverage [39] Operational Efficiency - The company is transitioning to a hybrid distribution model to improve efficiency and reduce costs [33][34] - Distribution expenses have increased due to e-commerce growth and inefficiencies in older distribution centers [31][32] - The company is working on eliminating unproductive SKUs to make room for new product innovations [24] Future Outlook - The company is confident in achieving its 15% margin target by sustaining mid-single-digit growth and improving gross margins [39] - There is a clear path to reaching $10 billion in revenue, with ongoing discussions about timelines and strategies [42] Additional Considerations - The company is navigating challenges related to tariffs and inflation, which have impacted consumer demand [41] - The leadership is committed to long-term growth and has established a clear path for achieving ambitious targets [42]