Levi Strauss & Co. Q3 FY2025 earnings call

Brand-led: Levi's had strong growth, with campaigns like Beyoncé's reimagined campaign driving women's business up 12% YTD, and Shabu campaign for men. Collaborations like with Nike and Toy Story also boosted brand heat. ### Product: Evolution to head-to-toe denim lifestyle continues, with Levi's women's up 9% in Q3, men's up 5%, bottoms up 6%, and tops up 9%. Premiumization efforts with Blue Tab launched in Europe. ### DTC-first: Global DTC sales up 9%, driven by strong store and online performance, with e-commerce up 16%. Store optimization initiatives improved consumer experience and productivity. ### International: International business grew 9%, with Asia accelerating. Beyond Yoga up 2%, DTC up 23%.

Net revenue grew 7%. International markets drove approximately 75% of growth, with the US contributing 25%. By channel, growth was evenly balanced between wholesale and direct-to-consumer, each contributing roughly 50% of the revenue increase. By gender, women's contributed approximately 40% of growth, with men's accounting for the balance. Gross margin was 61.7% of net revenue in Q3, expanding 110 basis points versus prior year.

Full-year: Raised revenue and EPS guidance. Organic net revenue expected ~6%, reported net revenue ~3% growth. Gross margin expected to expand 100 basis points. Adjusted SG&A to revenue range 11.4%-11.6%, adjusted EBIT margin 11.4%-11.6%. ### Q4: Expect organic net revenue growth ~1%, reported net revenue down ~3% due to non-comparables. Gross margin expected to contract ~100 basis points due to tariffs, adjusted EBIT margin 12.4%-12.6%, adjusted diluted EPS 36¢-38¢.

Tariffs: Higher tariffs than assumed in previous guidance impact gross margin. ### Macroeconomic uncertainties: Uncertain external backdrop affecting the market.

Q: Laurent Vasilescu asked about European momentum and Q4 guide.

A: Harmit Singh said Europe was up 3% for the quarter, pre-book for spring up mid-single-digit, Q4 guidance has tariff headwind impacting gross margin.

Q: Matthew Boss asked about category momentum and consumer.

A: Michelle Gass said denim category accelerating, market share leader, consumer resilient with unit growth across geos and categories.

Q: Ike Boruchow asked about SG&A and distribution.

A: Harmit Singh discussed gross margin factors, SG&A leverage, and distribution network transformation timeline.

Q: Paul Kearney asked about wholesale growth and inventory.

A: Michelle Gass said wholesale growth driven by existing accounts, inventory managed through SKU rationalization.

Q: Oliver Chen asked about Americas growth and SKU rationalization.

A: Michelle Gass said Americas business healthy, SKU rationalization reduced SKUs by 15% with higher productivity.

Q: Dana Telsey asked about lifestyle categories.

A: Michelle Gass said tops growing, with women's and men's tops performing well, aiming for 1:1 bottoms-to-tops ratio.

Q: Jay Sole asked about pricing.

A: Harmit Singh said no demand impact from pricing, focusing on value equation and product segmentation.

Q: Tracy Kogan asked about consumer response to higher prices and US wholesale sell-ins.

A: Harmit Singh said no consumer pullback, sell-ins consistent with sell-outs.