Levi Strauss & Co.

Good day, ladies and gentlemen, and welcome to the Levi Strauss & Company second quarter fiscal 2025 earnings conference call for the period ending June 1st, 2025. All parties will be in a listen-only mode until the question and answer session, at which time instructions will follow. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. This conference call is being broadcast over the internet, and a replay of the webcast will be accessible for one quarter on the company's website, LeviStrauss.com. I would now like to turn the call over to Ida Orfin, Vice President of Investment Relations at Levi Strauss & Company.

Thank you for joining us on the call today to discuss the results for our second quarter fiscal 2025. Joining me on today's call are Michelle Goss, our President and CEO, and Harmeet Singh, our Chief Financial and Growth Officer. We've posted complete Q2 financial results in our earnings release on the IR section of our website, investors.levistrouse.com. The link to the webcast of today's conference call can also be found on our site. We'd like to remind you that we will be making forward-looking statements on this call, which involves risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Please review our filings with the SEC, in particular the risk factors section of our Form 10-K for the fiscal year ended December 1, 2024, and the MD&A section of our recently filed Form 10Q for the factors that could cause our results to differ. Also note that the forward-looking statements on this call are based on information available to us as of today, and we assume no obligation to update any of these statements. During this call, we will discuss certain non-GAAP financial measures. These non-GAAP measures are not intended to be a substitute for our GAAP results. Reconciliations of our non-GAAP measures to their most comparable GAAP measure are included in today's press release. Reconciliation of non-GAAP forward-looking information to the corresponding GAAP measures, however, cannot be provided without unreasonable effort due to the challenge in quantifying various items, including but not limited to the effects of foreign currency fluctuations, taxes, any additional U.S. tariffs or responsive non-U.S. tariffs, and any future restructuring, restructuring related, severance, and other charges. This call is being webcast on our IR website, and a replay of this call will be available on the website shortly. Please note that Michelle and Harmeet will be referencing organic net revenues or constant currency numbers unless otherwise noted, and the information provided is based on continuing operations. Today's call is scheduled for one hour, so please limit yourself to one question at a time to give others the opportunity to have their questions addressed. And now I'd like to turn over the call to Michelle.

Thank you, and welcome everyone to today's call. I'm pleased to share that we delivered another standout quarter exceeding expectations across sales, margins, and EPS. We saw broad-based revenue growth across channels and categories, as well as strong margin expansion driven by the consistent execution of our strategic priorities. We arrive at the midpoint of 2025 in a strong position with the confidence to raise our top and bottom line outlook. Harmeet will share more on our guidance later in the call. In Q2, we delivered another quarter of high single-digit organic net revenue growth, up 9%. Direct-to-consumer was up 10%, reflecting the 13th consecutive quarter of positive comparable sales growth with strong and increasing profitability across channels. Our wholesale business delivered another quarter of growth, up 7%. Our US business maintained solid momentum, up 7%, while international was up 10% driven by outstanding results in Europe. And we continue to see strong performance in our core as well as outside growth in our key focus areas like women's and top. As we reach the midpoint of the year, I'd like to take a step back and reflect on the progress we've made transforming the business over the last 18 months. First, we've made significant strides in accelerating our shift toward becoming a DTC-first business across both brick and mortar and e-commerce. Today, our owned and operated channels represent over half of our business, and they continue to deliver consistent, healthy comps alongside improving profitability. This progress reflects our disciplined shift toward becoming a truly consumer-led DTC-first retailer. Second, we are making measurable progress in our evolution from a denim bottoms business to a full head-to-toe apparel lifestyle brand. While maintaining our dominance in jeans, we continue to drive outside growth in lifestyle categories, including tops, dresses, outerwear, and non-denim bottoms. Importantly, we've expanded our assortment with greater discipline, rationalizing skews, and introducing newness that is delivering stronger productivity and higher full-price sell-through. These choices are key drivers of our sustained market leadership and rising AUR. Third, we're narrowing our focus. As shared in May, we announced the sale of Dockers, which followed our decision to exit our denizen and footwear businesses. These bold strategic choices are enabling us to deliberately distort focus to the Levi's brand, putting brand equity, consumer connection, and category leadership at the center of every decision. Underpinning this transformation is a sharpened ability to operate with rigor and execute with excellence. From go-to-market acceleration and streamlining store operations to end-to-end supply chain efficiency, we are rewiring how we work, embedding structure, discipline, and cross-functional alignment at scale. These foundational shifts are unlocking growth, enhancing profitability, and enabling us to better serve our fans as we make progress toward becoming a $10 billion company. While the global operating environment has become more challenging, with uncertainty around tariffs and broader consumer behavior, we are navigating this period from a position of strength. I'll now walk you through highlights from the quarter in the context of our strategy. Note that all numbers that Harmeet and I will reference are on an organic, continuing operations basis. Let's start with our first strategy, being brand-led. The Levi's brand continues to resonate with fans around the world, growing 9% overall, with 6% growth in men and 14% in women. Our unaided brand awareness and consideration remains best in class, with our scores significantly increasing year over year in core markets across the globe. Our position as the most recognizable denim brand in the world is a powerful competitive advantage and a key indicator that our brand is stronger than ever. We continue to invest in the brand through global marketing initiatives and impactful activations, ensuring the Levi's brand remains at the center of culture. This quarter, we launched the third chapter of our Reimagine campaign with Beyonce, featuring a recreation of yet another classic marketing spot from our rich archive We brought this partnership to fans globally through a limited edition product drop, and through our unique House of Strauss network, we worked directly with her team to create custom, one-of-a-kind looks for her Cowboy Carter tour. Being front and center in music culture remains key to our marketing strategy. From the start of the music festival season, we've shown up in a major way, from dressing shaboosie at Stagecoach to hosting an incredible roster of influencers at Coachella. More recently, we were a leading sponsor for Primavera Sound in Barcelona, one of Europe's biggest festivals. With three Levi's dedicated stages, we outfitted influential pop icon Troye Sivan and offered an exclusive product collection. And to further drive brand heat, we continued to lean into the power of collaborations this quarter. After teasing at Paris Fashion Week last summer, we launched an elevated collection with Fashion House Sakai, which sold at a premium price point and performed exceptionally well. Turning to product. Our evolution into a denim lifestyle brand is gaining momentum. We continue to lead the industry and deliver the best fit, fabric, and innovation, striking the right balance between our authentic denim roots while infusing newness into the assortment. We're staying true to our denim heritage as we build out a compelling head-to-toe lifestyle assortment. And our amplified focus on women's and denim lifestyle is delivering outsized growth. We remain the unequivocal global leader in jeans. We are driving the trends today while setting the trends for tomorrow. Our Levi's bottoms business was up 8% driven by double digit growth in women's and men's was up mid single digits. While traditional fits like slim and straight leg styles remain a closet staple, Loose and baggy continue to gain popularity for both women and men. Ahead of the summer, we saw this trend accelerate in our shorts offering, which grew double digits in both men's and women's. With the 90s and Y2K fashion in full swing, longer and looser style shorts are in high demand. We're confident we have the right newness and innovation, like the baggy dad jort, in place to deliver for our fans and drive this trend. Earlier this year and ahead of the warmer months, we introduced an expanded line of lightweight looks, including our linen plus denim collection, to appeal to our fans' interest in lighter, softer, and more comfortable styles. We've infused these new fabric innovations across our assortment, from dresses, rompers, jeans, and truckers, to sweaters, wovens, and polos. We've seen strong success across both men and women, and will continue to fuel this trend throughout the year as more consumers look for lighter weight offerings year round. Another notable style trend gaining momentum is what we're calling Quiet Western, an evolution of the full Western theme we saw take off last year, but with a more subtle twist. With our robust denim lifestyle offering, we're seeing consumers find that perfect pairing more and more often. Women are pairing a classic boot cut or flare jean with our simple essential rib tank or one of our textured knits inspired from our heritage. And men are wearing a classic Western shirt with a khaki XX chino. Quiet Western is perfect for the Levi's denim lifestyle aesthetic and a natural place for us to lead. Last year, we reset our tops business, and that work is truly taking hold and propelling our evolution into denim lifestyles. This included bringing in new talent, new vendors, and new capabilities, including a new TOPS agility function on a shorter go-to-market cycle, which enables a more responsive and on-trend assortment in TOPS and graphic tees focused on our DTC channels. Energized by this new capability, along with an elevated assortment overall, our TOPS business grew 16% this quarter, with acceleration across genders and channels. Looking ahead, we have everything in place to continue the momentum we've experienced this year, a fresh lineup of product innovations, unique and exclusive product collaborations, and globally relevant partnerships. We have a number of great marketing activities planned for H2, including continuing to fuel our women's business with the launch of an additional chapter of Reimagine and the introduction of a new campaign focused on underscoring our relevancy and authenticity with men. And you can expect to see the Levi's brand come to life with more exciting and innovative collaborations, like our highly anticipated Levi's and Nike collab, which just dropped. For product, we're bringing even more fit and fabric innovation to excite our fans in the second half of the year. We're expanding our diversified fit portfolio to drive the loose and baggy trend, while also introducing freshness in skinny and straight silhouettes. As the quiet Western aesthetic takes hold, we're leaning into bootcut and Western-inspired fits to fuel this evolving style. And for our iconic 501, we're launching a breakthrough performance fabric with thermoregulating technology, bringing year-round comfort denim to a closet staple. Now shifting to our strategy to be DTC first. Our global direct-to-consumer performance this quarter was up 10%, with another quarter of very solid positive comp. Our strong performance came from increased store traffic, better conversion rates, and higher AURs, leading to growth both in stores and online across all geographic segments. As we have shared the past several quarters, we have been focused not only on driving DTC growth, but doing it in a healthy and profitable way. And those efforts are paying off as DTC margins continue to improve meaningfully. We continue to enhance our front of house consumer experience and back-of-house efficiency. And we are driving full price sales as consumers gravitate to our new assortments. Our work is not yet done, and we see opportunity for continued margin expansion in this channel. We also continue to expand our global store network, opening 16 net new doors this quarter. Store opening highlights include mainline locations in Nagoya, Japan, Seoul, Korea, and in the U.S. in New Jersey. These stores have been designed and built to better reflect our enhanced denim lifestyle offer. We drove another quarter of double-digit e-commerce growth, up 13% in Q2, with both traffic and AURs increasing as our efforts to elevate and improve the consumer experience on Levi.com are gaining traction. Our loyalty program is another key connection point to our consumers, enabling us to engage more deliberately with our fans. We're increasingly using data and analytics to personalize loyalty member product offerings and experiences. And we're seeing members purchase more frequently and transact at a higher AUR than the balance of our consumer base. With close to 40 million members worldwide, this quarter we expanded the program across several countries in Europe. And later this month, we're launching enhanced features for loyalty members in the US. Now turning to our third strategy, powering the portfolio. Our international business grew 10% in Q2, led by 15% growth in Europe. Last month, I had the opportunity to visit several of our key cities across Europe, including Paris, Barcelona, and Milan, some of the most fashion-forward cities in the world. I was blown away by how strong and relevant the Levi's brand is in the marketplace, both in stores and with consumers, especially young shoppers. Our team has been hard at work elevating how and where the brand shows up. and I'm constantly impressed by their commitment and dedication, which is another key driver in Europe's overall performance. We spent time with some of our key franchise partners who share our confidence with our growth prospects and are investing more behind our brand. We also met with key wholesale partners like Zalando and Galleries Lafayette, who are leaning into our broadened assortment and lifestyle, particularly with women. And even though Europe is our second largest geographic segment, we still see a significant growth opportunity ahead. Beyond Yoga was up 12% in Q2. DTC was up 31%, and we're encouraged by the very strong comp performance we are seeing in our stores. In June, we opened our first Beyond Yoga location on the East Coast in Greenwich, Connecticut, which showcases our new elevated format and design concepts and features our most comprehensive assortment spanning women, maternity, and men. Our largest Beyond Yoga door to date, this store is already delivering nicely relative to our expectations. And we're on track to open six more doors this year, bringing our total store count to 14. Turning briefly to Dockers. In May, we announced a definitive agreement to sell the brand to Authentic Brands Group. Dockers has been a leader in the global khaki category, and we're confident that Authentic is well positioned to guide the brand's next chapter. I want to take a moment to recognize and thank the Dockers team for their unwavering commitment, creativity, and many contributions to EllisonCo over the past several decades. Their work built an enduring brand with a loyal following, and we're proud of all they've accomplished. In addition, I want to express my deep appreciation to the cross-functional teams across EllisonCo who are working tirelessly on this transaction. In closing, This was another strong quarter across the board, clear evidence that our strategic agenda is gaining traction. We're entering the second half of 2025 from a position of strength with the right initiative in place to sustain our momentum. Levi's is a brand with 172 years of rich heritage and has remained a global icon. As we look ahead, Levi's has an even bolder future with a bigger legacy. And quarter by quarter, we're building it. And with that, I will turn it over to Harmeet to provide a financial overview of the quarter and our expectations for the year. Harmeet?