Levi Strauss & Co is involved in designing, marketing, and selling products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear, and related accessories directly or through third parties and licensees for men, women, and children under Levi's, Dockers, Signature by Levi Strauss & Co., and Denizen brands. The company manages its business according to three regional segments: the Americas, Europe, and Asia.
Performance Overview
Levi Strauss & Co (LEVI, Financial) reported net revenues of $1.52 billion for Q3 2024, which were flat on a reported basis but up 2% on a constant-currency basis compared to Q3 2023. The Levi’s® brand saw a 5% increase globally, marking the highest revenue growth in two years. However, the company faced challenges in the Americas, where net revenues decreased by 1% on a reported basis.
Financial Achievements
Despite the flat revenue, Levi Strauss & Co (LEVI, Financial) achieved significant margin expansion. The gross margin rose by 440 basis points year-over-year to 60.0%, driven by lower product costs and a favorable channel and brand mix. Adjusted diluted EPS increased by 18% year-over-year to $0.33, although this was below the analyst estimate of $0.34.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Revenues | $1.52 billion | $1.51 billion | 0% |
| Gross Profit | $910.7 million | $839.5 million | 8.5% |
| Net Income | $21 million | $10 million | 110% |
| Diluted EPS | $0.05 | $0.02 | 150% |
| Adjusted Diluted EPS | $0.33 | $0.28 | 18% |
Balance Sheet and Cash Flow
As of August 25, 2024, Levi Strauss & Co (LEVI, Financial) had cash and cash equivalents of $577 million, with total liquidity of approximately $1.3 billion. Total inventories decreased by 7% on a dollar basis. The company returned approximately $69 million to shareholders in the third quarter, including $52 million in dividends and $18 million in share repurchases.
Strategic Review and Future Outlook
The company announced a strategic review of the Dockers® brand, which could include a potential sale or other strategic transactions. Levi Strauss & Co (LEVI, Financial) reaffirmed its adjusted diluted EPS guidance range of $1.17 to $1.27 for the full fiscal year 2024.
“The underlying fundamentals of our business are getting stronger, driven by the Levi’s® brand, which grew 5% globally in Q3, a significant acceleration from H1 and the highest revenue growth in two years,” said Michelle Gass, President and CEO of Levi Strauss & Co.
“We delivered significant margin expansion and double-digit adjusted diluted EPS growth in Q3,” said Harmit Singh, Chief Financial and Growth Officer of Levi Strauss & Co.
Analysis
Levi Strauss & Co (LEVI, Financial) demonstrated resilience in a challenging market environment, with strong performance in Europe and Asia offsetting weaknesses in the Americas. The company's focus on the Levi’s® brand and direct-to-consumer channels has yielded positive results. However, the strategic review of the Dockers® brand indicates potential challenges in that segment. Investors should monitor the company's ability to sustain its margin improvements and revenue growth in the coming quarters.
Explore the complete 8-K earnings release (here) from Levi Strauss & Co for further details.
