Press release·03/03/2025 18:10:58

Overview of Levi Strauss & Co.

Levi Strauss & Co. is an iconic American company with a rich history dating back to 1853. The company designs, markets and sells products including jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets and related accessories for men, women and children around the world under its Levi’s®, Dockers®, Levi Strauss Signature™ and Denizen® brands.

The company operates its business through three reportable segments: Americas, Europe, and Asia. The Dockers® and Beyond Yoga® businesses are managed separately and reported under the “Other Brands” category. Levi’s® brand products represented approximately 89% of the company’s net revenues in fiscal year 2024.

Levi Strauss & Co. sells its products through a global network of approximately 50,000 retail locations in 120 countries, including its own company-operated stores and e-commerce sites. The company’s wholesale channel generated 54% of net revenues in fiscal year 2024, while its direct-to-consumer (DTC) channel, including company-operated stores and e-commerce, generated 46% of net revenues.

Financial Performance Highlights

In fiscal year 2024, Levi Strauss & Co. reported the following key financial results:

• Net revenues increased 2.9% to $6.36 billion, with organic net revenues (excluding the impact of currency, divestitures and the 53rd week) increasing 3.2%.
• Operating income decreased 25.2% to $264.1 million, primarily due to higher SG&A expenses, restructuring charges, and impairment charges.
• Net income decreased 15.6% to $210.6 million.
• Adjusted EBIT (a non-GAAP measure) increased 17.1% to $649.9 million, with Adjusted EBIT margin improving 120 basis points to 10.2%.
• Adjusted net income (a non-GAAP measure) increased 14.1% to $502.7 million.
• Adjusted diluted earnings per share (a non-GAAP measure) increased 13.6% to $1.25.

The company’s performance was impacted by several factors, including:

Revenue Trends

• The Americas segment saw a 3.7% increase in net revenues, driven by growth in the DTC channel, partially offset by a decline in the wholesale channel.
• The Europe segment reported a 2.4% increase in net revenues, with growth in the DTC channel offsetting a decline in the wholesale channel.
• The Asia segment had a 2.1% increase in net revenues, with growth in both the DTC and wholesale channels.
• The Dockers® brand saw a 4.0% decrease in net revenues, while the Beyond Yoga® brand had a 13.0% increase.

Profitability Impacts

• Gross margin improved to 60.0%, up from 56.9% in the prior year, driven by lower product costs and favorable channel and brand mix.
• SG&A expenses increased 6.4%, primarily due to higher selling expenses to support DTC expansion, restructuring-related charges, and impairment charges.
• The company recognized $188.7 million in restructuring charges related to its “Project Fuel” initiative, as well as $116.9 million in goodwill and intangible asset impairment charges, primarily related to the Beyond Yoga® brand.

Liquidity and Capital Allocation

• Cash provided by operating activities was $898.4 million, up from $435.5 million in the prior year.
• The company ended the year with $690.0 million in cash and cash equivalents and $823.8 million in total liquidity.
• Levi Strauss & Co. returned $198.5 million to shareholders through dividends and $90.1 million through share repurchases during the year.
• The company expects capital expenditures of approximately $260 million in fiscal year 2025 to support investments in new stores, distribution capacity and technology.

Analysis of Strengths and Weaknesses

Strengths:

• Strong, iconic brand portfolio led by the Levi’s® brand, which represents the majority of the company’s revenues.
• Diversified business model across geographies, channels, brands and product categories.
• Expanding direct-to-consumer presence, with DTC generating 46% of net revenues in fiscal year 2024.
• Improving gross margins through favorable channel and brand mix.
• Solid liquidity position and cash flow generation to support growth investments and shareholder returns.

Weaknesses:

• Ongoing macroeconomic challenges, including inflation, rising interest rates and recession fears, impacting consumer spending.
• Competitive pressures in the wholesale channel from e-commerce and vertically-integrated specialty stores.
• Restructuring and impairment charges related to the Beyond Yoga® brand and other initiatives, weighing on profitability.
• Exposure to foreign currency fluctuations, which can negatively impact financial results.

Outlook and Future Prospects

Looking ahead, Levi Strauss & Co. faces a complex and challenging retail environment due to macroeconomic pressures, such as inflation, rising interest rates and recession fears. These factors have led to reduced consumer spending, which has had and may continue to have an adverse effect on the company’s revenues, operating margins and net income.

To address these challenges, the company is executing on its “Project Fuel” initiative, a multi-year global productivity program designed to optimize its operating model, redesign business processes and identify cost savings opportunities. This initiative has resulted in significant restructuring charges in fiscal year 2024 and may lead to additional charges in the future.

The company is also evaluating strategic alternatives for its Dockers® brand, which could include a potential sale or other strategic transaction. This review reflects the company’s focus on its core Levi’s® brand and DTC channel, which it believes will drive long-term profitable growth.

Despite the near-term headwinds, Levi Strauss & Co. remains well-positioned with its strong brand portfolio, diversified business model and focus on DTC expansion. The company’s key long-term objectives are to strengthen its brands globally, put DTC first, and further diversify across geographies, categories, genders and channels.

To achieve these objectives, the company plans to continue investing in capital expenditures, primarily for new stores, distribution capacity and technology. It also intends to return capital to shareholders through dividends and share repurchases, while pursuing strategic acquisitions that support its current strategies.

Overall, Levi Strauss & Co. faces a challenging operating environment, but its iconic brands, diversified business model and strategic initiatives position the company for long-term success, provided it can navigate the current macroeconomic uncertainties.