Levi Strauss & Co. (LEVI) Q4 2025 Earnings Call Transcript
Organic net revenue growth 7% year-over-year growth in 2025, driven by broad-based growth across all facets of the business.
Levi's brand growth 7% year-over-year growth in 2025, solidifying its position as the #1 denim brand globally.
DTC (Direct-to-Consumer) growth 11% year-over-year growth in 2025, now comprising approximately half of the total business. Margin expansion was driven by high single-digit comp growth and a more efficient operating structure.
Wholesale channel growth 4% year-over-year growth in 2025, supported by an expanded lifestyle assortment and new distribution.
Women's category growth 11% year-over-year growth in 2025, with double-digit growth in both tops and bottoms.
Men's category growth 5% year-over-year growth in 2025.
Gross margin Achieved the highest-ever gross margin in 2025, though Q4 gross margin contracted by 100 basis points to 60.8% due to tariffs, partially offset by pricing actions and higher full-price selling.
Adjusted EBIT margin Expanded by 70 basis points in 2025, reflecting disciplined growth conversion into profitability.
Q4 total company revenues Increased 5% year-over-year, with 7% growth during the November-December holiday season, marking the highest holiday revenue in a decade.
Beyond Yoga growth 45% year-over-year growth in Q4 and 17% growth for the full year 2025, driven by product expansion and strong DTC performance.
Adjusted diluted EPS (Q4) $0.41, higher than expectations, despite a $0.03 headwind from a higher tax rate.
Inventory levels Reported inventory dollars up 9% year-over-year, with units up 2%, primarily driven by tariffs.
Americas net revenues (Q4) Up 2% year-over-year, with U.S. DTC business growing 6% and LatAm business up 8%.
Europe net revenues (Q4) Up 10% year-over-year, led by double-digit growth in the U.K. and Germany.
Asia net revenues (Q4) Up 4% year-over-year, with double-digit growth in key markets like Japan and Turkey.
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Levi Strauss & Co. Q4 2025 Earnings Call Highlights
- Revenue Growth: In 2025, Levi Strauss achieved a 7% organic net revenue growth, with DTC business growing by 11%, demonstrating the company's successful transformation into a DTC-first, comprehensive denim lifestyle retailer, enhancing its market competitiveness.
- Gross Margin Performance: The gross margin for Q4 was 60.8%, contracting by 100 basis points year-over-year primarily due to tariff impacts, but partially offset by pricing actions and higher full-price selling, showcasing the company's efforts in cost control.
- Future Outlook: Management expects organic net revenue growth of 4%-5% in 2026, planning to drive high growth in DTC through the opening of 50 to 60 new doors and continued e-commerce growth, further solidifying its market position.
- Shareholder Returns: In 2025, Levi Strauss returned $363 million to shareholders, a 26% increase from the prior year, reflecting the company's commitment to enhancing shareholder value while maintaining consistent profit growth.
Levi Strauss Reports Decline in Q4 Profit
- Profit Decline: Levi Strauss reported a Q4 net profit of $158 million, or $0.40 per share, down from $182.5 million and $0.46 per share last year, indicating pressure on the company's profitability.
- Adjusted Earnings: Excluding items, Levi's adjusted earnings were $162.9 million, or $0.41 per share, showing slight improvement but failing to offset the overall profit decline.
- Revenue Growth: The company's revenue rose 0.9% year-over-year to $1.765 billion, slightly above last year's $1.749 billion, indicating stability in sales but not significantly boosting profit growth.
- Market Reaction: Despite revenue growth, the profit decline may impact investor confidence, prompting Levi Strauss to implement measures to enhance profitability in response to future market challenges.
