Levi Strauss & Co. reported net revenues of $1.8 billion in the fiscal 2024 fourth quarter ended December 1, 2024, representing an increase of 12 percent on a reported basis and 8 percent on an organic basis versus Q4 2023. Organic net revenues exclude the impacts of foreign exchange rates, divested businesses, acquisitions, and any 53rd week from the change in reported net revenues.
- In the Americas, net revenues increased 12 percent on a reported basis and 9 percent on an organic basis. Within the Americas, the U.S. grew 6 percent on an organic basis.
- In Europe, net revenues increased 15 percent on a reported basis and 6 percent on an organic basis, reflecting growth across a majority of markets.
- Asia net revenues increased 9 percent on a reported and organic basis, reflecting growth across channels.
Other Brands net revenues increased 10 percent on a reported basis and 5 percent on an organic basis. Dockers increased 9 percent on a reported basis and 5 percent on an organic basis.
- Beyond Yoga was up 4 percent, on top of 19 percent growth in the prior year, and was up double-digits for the full-year. The brand increased 10 percent on a reported basis.
“Our broadened product assortment is gaining traction, especially in fleece and outerwear,” offered Michelle Gass, CEO, Levi Strauss & Co. “We are also excited to open our first East Coast store in Connecticut later this year. And we remain confident about the prospects for Beyond Yoga to one day become a billion-dollar brand.”
Gass went on to say that they think about expanding their Total Addressable Market (TAM), but also said it is really about this evolution from their business is denim bottoms to a business is total head-to-toe apparel rooted in denim.
“We also see trends in the marketplace, Gass continued. “So, when you think about denim trends, that’s one thing, but if you look at other categories like active, active athleisure, that category continues to grow. We’re seeing, I’ll get to this in a moment, around men’s in total non-denim. But like in our new tech platform for men, which is Levi’s way of doing sort of this athleisure we’re seeing nice growth there and that will continue. It always has to be true to the Levi’s brand.”
DTC (Direct-to-Consumer) net revenues increased 19 percent on a reported basis and 14 percent on an organic basis. DTC growth on an organic basis reflected an 11 percent increase in the U.S., a 17 percent increase in Europe and an 8 percent increase in Asia. Net revenues from e-commerce grew 19 percent on a reported and 14 percent on an organic basis. DTC comprised 45 percent of total organic net revenues in the fourth quarter.
Wholesale net revenues increased 7 percent on a reported basis and 3 percent on an organic basis.
Income Statement Summary
Gross margin increased 350 basis points to 61.3 percent, said to be a company record, from 57.8 percent in Q4 2023 primarily driven by lower product costs, including savings from Project Fuel initiatives, favorable channel mix, and higher full price sales.
Selling, general and administrative (SG&A) expenses were $901 million compared to $798 million in Q4 2023. Adjusted SG&A was up 17.4 percent to $880 million compared to $750 million last year. As a percentage of sales, adjusted SG&A was 47.8 percent compared to 45.6 percent last year. The increase in SG&A versus prior year is primarily attributable to an increased investment in A&P, higher distribution expenses as a result of our DC transitions, and higher compensation incentives given performance in Q4 offset by leverage on selling expenses.
Operating margin was 11.5 percent compared to 9.2 percent in Q4 2023. Adjusted EBIT margin increased 120 basis points to 13.4 percent from 12.2 percent last year due to gross margin expansion.
Restructuring charges were $14 million related to Project Fuel.
Interest and other expenses, net, which include foreign exchange losses, were $12 million in the aggregate compared to $15 million in Q4 2023.
The effective income tax rate was 8.6 percent, compared to 7.2 percent in Q4 2023.
Net income was $183 million compared to $127 million in Q4 2023. Adjusted net income was $202 million compared to $179 million in Q4 2023.
Diluted EPS was 46 cents per diluted share compared to 32 cents per diluted share in Q4 2023. Adjusted diluted EPS was 50 cents per diluted share compared to 44 cents per diluted share in Q4 2023.
Fiscal 2024 Full Year Summary
- Reported net revenues of $6.4 billion were up 3 percent to FY 2023, and up 3 percent on an organic basis.
- Gross margin was 60.0 percent; 310 basis points above FY 2023.
- Operating margin was 4.2 percent; Adjusted EBIT margin was 10.2 percent, compared to 9.0 percent in FY 2023.
- Net income was $211 million; Adjusted net income was $503 million, up from $441 million in FY 2023
Diluted EPS was 52 cents per diluted share; Adjusted diluted EPS was $1.25, up from $1.10 in FY 2023
Record Adjusted Free Cash Flow generation of $671 million. - The company returned $289 million in capital to shareholders, up 45 percent to prior year.
Balance Sheet Review as of December 1, 2024
- Cash and cash equivalents were $690 million, while total liquidity was approximately $1.5 billion.
- Total inventories decreased 4 percent on a dollar basis.
“As we look to the year ahead, we are encouraged by the momentum that our strategic priorities are driving across the business,” said Gass “We are focused on accelerating our performance on both the top and bottom line by, first, continue to drive Levi’s growth across genders and categories and create powerful brand moments. We will do this by broadening our brand relevant lifestyle assortments while maintaining our leadership and denim bottoms in our key markets.
“Second, further accelerate our direct to consumer channels while reinvigorating our wholesale business. We will continue to hone our retail fundamentals, deliver relevant and innovative product assortments and drive demand through engaging marketing.
“And third, accelerate growth across our geographic portfolio by generating profitable growth in our largest regions, North America and Europe, and leaning into the opportunities in fast growing regions such as Latin America and Asia Pacific, while stabilizing greater China. We will also continue to pursue a successful next chapter for Dockers as we explore a sale of the brand, and we remain confident about the prospects for Beyond Yoga to one day become a billion-dollar brand.”
