Levi Strauss & Co.

Good day, ladies and gentlemen, and welcome to the Levi Strauss and Company third quarter fiscal 2025 earnings conference call for the period ending August 31st, 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 Investor Relations at Levi Strauss & Company.

Thank you for joining us on the call today to discuss the results for our third 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'd like to remind you that we will be making forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in our reports filed with the SEC. We assume no obligation to update any of these forward-looking statements. Additionally, during this call, we will discuss certain non-GAAP financial measures, which are not intended to be a substitute for our GAAP results. Definitions of these measures and reconciliations to their most comparable GAAP measure are included in our earnings release, available on the IR section of our website, investors.levisstrauss.com. 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. Finally, this call is being webcast on our IR website, and a replay of this call will be available on the website shortly. 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 the call over to Michelle.

Thank you, and welcome, everyone. What I'll share today builds on the themes I've been emphasizing this year as we pivot to become a DTC First head-to-toe denim lifestyle retailer. The consistent execution of our strategic priorities is driving a meaningful inflection in our financial performance. And today, I'm pleased to share that we delivered another very strong quarter with upside across the P&Ls, giving us the confidence to raise our full-year revenue in EPS guidance. In Q3, we delivered our fourth consecutive quarter of high single-digit organic revenue growth. Strength was once again broad-based across our business, including DTC and wholesale, international and domestic, women's and men's, and tops and bottoms. Our growth was led by continued strong sales and profitability in our direct-to-consumer channel, up 9%, fueled by strong comp growth as well as solid performance in global wholesale. Our largest market, the U.S., grew 3%, and our international business was up 9%, led by an acceleration in Asia. And we continue to see robust performance in our core, as well as outsized growth in our key focus areas like women's and tops. The results we've delivered this quarter against an increasingly complex backdrop are yet another proof point that our strategies are working. Looking ahead, there are several factors that give me even more conviction that our momentum will continue. First, our narrow focus enables us to maximize the full potential of the Levi's brand. We will continue to build momentum through impactful marketing campaigns, strategic partnerships, and innovative collaborations, ensuring that the brand remains firmly at the center of culture. Second, the total addressable market for denim is large and growing as consumer preferences continue to shift towards casualization. As the definitive market leader, we are well positioned to take advantage and drive growth. Third, our denim leadership puts us in a prime position to define and own head-to-toe denim lifestyle, further expanding our adjustable market. As we drive this momentum forward, we'll continue to deliver an innovative and robust product pipeline across genders and categories. Fourth, our DTC First strategy is bringing us closer to the consumer and generating consistent and significant growth, while we have also stabilized and grown our wholesale business. Both channels are seeing strong improvements in profitability. Fifth, While international already comprises nearly 60% of our total business, there are still untapped opportunities for us to grow, particularly in Asia where our business has momentum and the opportunity for continued expansion is considerable. Underpinning all of this is our culture of performance with a sharpened focus on operating with rigor and executing with excellence, from go-to-market efficiencies and more productive store operations to end-to-end supply chain improvements. I will now turn to highlights from the third quarter in the context of our strategies. 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. Levi's had another strong quarter of growth. In the quarter, we launched the final chapter of the Reimagine campaign with Beyonce. This campaign delivered as intended, fueling momentum across the business, specifically driving growth in our Levi's women's business up 12% year-to-date. In August, we debuted our new global campaign starring Shaboosie, underscoring our relevancy and authenticity with men. The campaign showcases our most iconic products, the 501, the trucker jacket, and the Western shirt, and we're pleased with how this campaign is being received by our fans. In addition, we also cultivated enthusiasm for the brand through a broad range of collaborations, including a joint collection with Nike fusing Levi's heritage denim craftsmanship with Nike's athletic sneaker culture. Our collaborations generate brand heat and introduce Levi's to new consumers. And just this week, we launched a special collection with Toy Story in celebration of their 30th anniversary. Turning to product. Our evolution to a head-to-toe denim lifestyle retailer continues to gain momentum, all while strengthening our position as the global authority in denim. Our Levi's women's business continues to deliver outsized growth, up 9% in Q3, while our leading Levi's men's business grew a solid 5%. Driven by our diversified fit portfolio, we saw strong growth in our bottoms business, which was up 6%. We're continuing to inject newness into the looser fit trend with the new baggy utility silhouettes for him and the launch of our baggy dad barrel for her. And we're driving a revival in low rise with our low and super low collection of fits, which are delivering strong growth. As we evolve into denim lifestyle, we're making meaningful progress on our seasonally relevant assortments as consumers look for more buy now, wear now products. Following last year reset, tops continued to drive notable growth, up 9%, with strength across women's and men's. For the quarter, our shorts business delivered strong growth across genders. We continue to infuse newness into the assortment through fit and fabric innovation from our linen blend styles to the launch of the 501 curve. And with respect to our premiumization efforts, we began to roll out our elevated blue tab collection to Europe in early September, following a successful launch in Asia and the US earlier this year. Blue tab merges Levi's iconic aesthetic with the refined quality and thoughtful Japanese craftsmanship. Looking to the holiday season, we are well positioned with the right merchandise assortment and the right marketing campaign. We're expanding the range of occasions and amplifying the many ways that fans can embrace our denim lifestyle assortment through elevated fabrics, textures, and embellishments. We're excited to showcase Levi's through a fresh lens that reflects the season's full spectrum of style. Now shifting to our strategy to be DTC first. Global direct-to-consumer sales were up 9% driven by strong performance in both our stores and online. We generated high single digit comp growth fueled by higher UPT, AUR, and full price selling as our expanded denim lifestyle assortment continues to resonate with our consumers around the world. And as we continue to grow our DTC channel, we remain focused on doing so profitably with our productivity initiatives resulting in more than 400 basis points of margin expansion in the quarter. We're pleased with the strong results from our store optimization initiatives, which have improved both the consumer experience and store productivity. We've enhanced our in-store lifestyle merchandising to make the store environment more inspiring and shoppable, highlighting our broader assortment of head-to-toe looks. We've also been focused on improving our assortment planning and lifecycle management, resulting in lower promotions and higher full-price sellings. Additionally, we're in the process of rolling out a new global selling model for our store team, which, coupled with our enhanced labor scheduling system, is improving the consumer experience and delivering operational efficiencies. We had another quarter of very strong growth in e-com, up 16%, driven by an increase in traffic across all segments. We expect e-commerce to continue to be our fastest-growing channel on the path to comprising 15% of our total business, up from just 9% today. In our wholesale channel, net revenues were up 5%, reflecting growth across all segments. In the U.S., the Levi's brands were up 2% as we continue to invest in top doors and expand and elevate our assortments. Western Wear is core to who we are, and we're pleased to have recently expanded our product assortment with Boot Barn and gained a new distribution at Cavendish. We also see opportunities to increase our penetration with premium and specialty accounts as we broaden and elevate our lifestyle assortment. Now turning to our third strategy, powering the portfolio, our international business grew 9% in Q3. Asia accelerated in the quarter, driven by double-digit growth in key markets like India, Japan, Korea, and Turkey. I recently visited several stores across India, Korea, and Japan, And it is clear that consumers are responding to the work we've done to ensure the best expression of our denim lifestyle assortment. Japan in particular is a market with a very high bar for denim. We've been investing in Japan over the past decade, transitioning the market from primarily a wholesale business to now close to 75% DTC. Walking our stores in Nagoya, Shinjuku, and Harajuku, which are some of our highest volume stores in the world, you'll see the fullest and most premium expression of the Levi's brand. Up almost 50% since 2019, and continuing to gain momentum, we remain optimistic about future opportunities in Japan, and we will replicate our successful playbook in this market across the globe. Beyond Yoga was up 2%, and DTC was up 23%, driven by comps, new doors, and e-commerce. Growth in DTC was offset by a decline in wholesale as the team focuses on higher quality sales in the channel. Looking to Q4, we have additional stores opening in Boston, Houston, and two more stores in Northern California, bringing our total store count to 14. We expect Beyond Yoga to end the year up low teens versus prior year. In closing, we delivered another standout quarter with sales and earnings growth that positions us to increase our outlook for the year. We are fully prepared and well positioned for holiday as we enter the season with momentum. Despite an increasingly uncertain external backdrop, we have several tailwinds that give me confidence in not only delivering a strong finish to 2025, but also another strong year in 2026. Finally, I'd like to thank our incredible, talented, and passionate team for driving our transformation into the world's denim lifestyle leader and delivering outstanding service to our fans every day. And with that, I will turn it over to Harmeet to provide a financial overview of the quarter and our expectations for the remainder of the year. Harmeet?