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's Launches Bold Global Campaign 'Behind Every Original'
- Campaign Highlights: The Levi's® brand launched its global campaign 'Behind Every Original' during the Super Bowl, showcasing both celebrities and everyday individuals from behind, emphasizing the brand's deep connection to culture and aiming to engage consumers across generations.
- Star-Studded Cast: The campaign's anthem film 'Backstory,' directed by Kim Gehrig, features cultural icons like Doechii and ROSÉ, highlighting their unique styles in Levi's® jeans, further solidifying the brand's position in music, sports, and fashion culture.
- Authentic Storytelling: Shot over six days, the production team focused on casting real individuals such as cowboys and construction workers to ensure authenticity, while collaborating with Doechii's choreographer to enhance the ad's expressiveness and appeal.
- Multi-Channel Promotion: The campaign extends beyond TV ads to social media, digital platforms, and in-store promotions, with plans to continuously share each 'Original's' backstory throughout the year, strengthening the emotional connection between the brand and consumers.
2016 Nostalgia Sparks Retail Revival Potential
- Social Media Surge: Since January 1, user-generated '2016' playlists on Spotify have surged by 790%, indicating a strong nostalgic sentiment among young consumers that could drive sales for brands associated with that era.
- Return to Brick-and-Mortar: Young consumers are rediscovering the joy of in-store shopping, reflecting a longing for the carefree atmosphere of 2016, which may lead to improved performance for retailers.
- Brand Opportunities: Brands like Abercrombie & Fitch could leverage this nostalgia wave to reshape their image, particularly if they successfully distance themselves from past controversies, potentially attracting more young consumers.
- Market Outlook: Retail trends typically last about 18 months, and this nostalgia cycle is expected to persist through the midterm elections this year, possibly extending into next year, providing long-term market opportunities for related brands.
Gen Z's Nostalgia for 2016 and Its Impact on Retail
- Nostalgia Trend Emergence: Gen Z's nostalgia for 2016 has rapidly spread across social media, with Spotify user-generated '2016' playlists soaring by 790% since January 1, indicating a strong yearning for the cultural elements of that time, potentially driving a revival for related brands.
- Return to Brick-and-Mortar: Young consumers are rediscovering the appeal of in-store shopping after years dominated by e-commerce, reflecting a longing for the carefree and familiar comfort of 2016, which could stimulate a retail resurgence.
- Brand Opportunities Arise: Brands like Abercrombie & Fitch and Levi Strauss, which held significant cultural relevance in 2016, may leverage this nostalgia wave to regain market traction, especially as consumers show renewed interest in classic styles.
- Market Strategy Adjustments: As nostalgia rises, brands must adjust their market strategies to align with Gen Z's desire for authenticity and less intentionality, with successful brands likely to harness this emotional connection to reshape their cultural relevance.
Jefferies Initiates Buy Rating on Levi Strauss & Co.
- Direct-to-Consumer Transformation: Levi Strauss (LEVI) is enhancing its market competitiveness by transforming into a direct-to-consumer model, which provides greater control over pricing, inventory, and innovation, expected to drive future sales growth.
- Sales Growth Highlights: Notably, tops account for 29% of sales and the women's business represents 39%, with growth in these segments poised to support Levi's double-digit growth and solidify its position as a lifestyle brand.
- Price Target Set: Jefferies analyst Blake Anderson has set a price target of $25 for Levi, reflecting confidence in its future growth potential, which is likely to attract more investor interest.
- Stock Price Surge: Following Jefferies' Buy rating, Levi's stock price surged 4.6% on Wednesday, closing at $20.32, indicating a positive market response to its transformation strategy.
Latest Wall Street Rating Updates
- AMD Rating Reaffirmed: Barclays reiterates its overweight rating on AMD, citing the company's growing share in the PC and server markets, alongside significant spending potential from clients like OpenAI, indicating strong future growth in AI.
- Airbnb Upgrade: Citizens upgrades Airbnb from market perform to market outperform with a price target of $160, anticipating multiple upcoming catalysts that could drive the stock beyond current expectations.
- GE Vernova Rating Recovery: Baird upgrades GE Vernova from neutral to outperform, asserting that concerns about capacity are overblown and that the energy infrastructure cycle is still in its early stages, positioning GE Vernova as a key beneficiary.
- Broadridge Financial Upgrade: DA Davidson raises Broadridge's rating from hold to buy, arguing that the recent 30% decline in shares presents a buying opportunity, maintaining a price target of $228 as the sell-off is seen as excessive.
Levi Strauss Could Present a Great Buying Opportunity Following Earnings Decline
Earnings Report Overview: Levi Strauss reported a double beat in its fourth-quarter earnings, with adjusted earnings per share (EPS) at 41 cents, exceeding analyst expectations, and revenue of $1.77 billion, surpassing forecasts.
Future Projections: The company anticipates revenue growth of 5% to 6% for 2026, but its EPS guidance of $1.40 to $1.46 falls short of analysts' expectations for a 9.45% growth.
Market Challenges: Levi's faces challenges from tariffs impacting its business, but it aims to offset these through pricing power with vendors and lower cotton prices.
Super Bowl Marketing Opportunity: Levi's will debut its first Super Bowl commercial in 20 years, potentially boosting brand visibility and sales, especially as the event will take place at Levi's Stadium.
Levi's Launches Bold Global Campaign 'Behind Every Original'
- Campaign Highlights: The Levi's® brand launched its global campaign 'Behind Every Original' during the Super Bowl, showcasing both celebrities and everyday individuals from behind, emphasizing the brand's deep connection to culture and aiming to engage consumers across generations.
- Star-Studded Cast: The campaign's anthem film 'Backstory,' directed by Kim Gehrig, features cultural icons like Doechii and ROSÉ, highlighting their unique styles in Levi's® jeans, further solidifying the brand's position in music, sports, and fashion culture.
- Authentic Storytelling: Shot over six days, the production team focused on casting real individuals such as cowboys and construction workers to ensure authenticity, while collaborating with Doechii's choreographer to enhance the ad's expressiveness and appeal.
- Multi-Channel Promotion: The campaign extends beyond TV ads to social media, digital platforms, and in-store promotions, with plans to continuously share each 'Original's' backstory throughout the year, strengthening the emotional connection between the brand and consumers.
2016 Nostalgia Sparks Retail Revival Potential
- Social Media Surge: Since January 1, user-generated '2016' playlists on Spotify have surged by 790%, indicating a strong nostalgic sentiment among young consumers that could drive sales for brands associated with that era.
- Return to Brick-and-Mortar: Young consumers are rediscovering the joy of in-store shopping, reflecting a longing for the carefree atmosphere of 2016, which may lead to improved performance for retailers.
- Brand Opportunities: Brands like Abercrombie & Fitch could leverage this nostalgia wave to reshape their image, particularly if they successfully distance themselves from past controversies, potentially attracting more young consumers.
- Market Outlook: Retail trends typically last about 18 months, and this nostalgia cycle is expected to persist through the midterm elections this year, possibly extending into next year, providing long-term market opportunities for related brands.
Gen Z's Nostalgia for 2016 and Its Impact on Retail
- Nostalgia Trend Emergence: Gen Z's nostalgia for 2016 has rapidly spread across social media, with Spotify user-generated '2016' playlists soaring by 790% since January 1, indicating a strong yearning for the cultural elements of that time, potentially driving a revival for related brands.
- Return to Brick-and-Mortar: Young consumers are rediscovering the appeal of in-store shopping after years dominated by e-commerce, reflecting a longing for the carefree and familiar comfort of 2016, which could stimulate a retail resurgence.
- Brand Opportunities Arise: Brands like Abercrombie & Fitch and Levi Strauss, which held significant cultural relevance in 2016, may leverage this nostalgia wave to regain market traction, especially as consumers show renewed interest in classic styles.
- Market Strategy Adjustments: As nostalgia rises, brands must adjust their market strategies to align with Gen Z's desire for authenticity and less intentionality, with successful brands likely to harness this emotional connection to reshape their cultural relevance.
Jefferies Initiates Buy Rating on Levi Strauss & Co.
- Direct-to-Consumer Transformation: Levi Strauss (LEVI) is enhancing its market competitiveness by transforming into a direct-to-consumer model, which provides greater control over pricing, inventory, and innovation, expected to drive future sales growth.
- Sales Growth Highlights: Notably, tops account for 29% of sales and the women's business represents 39%, with growth in these segments poised to support Levi's double-digit growth and solidify its position as a lifestyle brand.
- Price Target Set: Jefferies analyst Blake Anderson has set a price target of $25 for Levi, reflecting confidence in its future growth potential, which is likely to attract more investor interest.
- Stock Price Surge: Following Jefferies' Buy rating, Levi's stock price surged 4.6% on Wednesday, closing at $20.32, indicating a positive market response to its transformation strategy.
Latest Wall Street Rating Updates
- AMD Rating Reaffirmed: Barclays reiterates its overweight rating on AMD, citing the company's growing share in the PC and server markets, alongside significant spending potential from clients like OpenAI, indicating strong future growth in AI.
- Airbnb Upgrade: Citizens upgrades Airbnb from market perform to market outperform with a price target of $160, anticipating multiple upcoming catalysts that could drive the stock beyond current expectations.
- GE Vernova Rating Recovery: Baird upgrades GE Vernova from neutral to outperform, asserting that concerns about capacity are overblown and that the energy infrastructure cycle is still in its early stages, positioning GE Vernova as a key beneficiary.
- Broadridge Financial Upgrade: DA Davidson raises Broadridge's rating from hold to buy, arguing that the recent 30% decline in shares presents a buying opportunity, maintaining a price target of $228 as the sell-off is seen as excessive.
Levi Strauss Could Present a Great Buying Opportunity Following Earnings Decline
Earnings Report Overview: Levi Strauss reported a double beat in its fourth-quarter earnings, with adjusted earnings per share (EPS) at 41 cents, exceeding analyst expectations, and revenue of $1.77 billion, surpassing forecasts.
Future Projections: The company anticipates revenue growth of 5% to 6% for 2026, but its EPS guidance of $1.40 to $1.46 falls short of analysts' expectations for a 9.45% growth.
Market Challenges: Levi's faces challenges from tariffs impacting its business, but it aims to offset these through pricing power with vendors and lower cotton prices.
Super Bowl Marketing Opportunity: Levi's will debut its first Super Bowl commercial in 20 years, potentially boosting brand visibility and sales, especially as the event will take place at Levi's Stadium.
