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Levi Strauss & Co (LEVI)
NYSE:LEVI
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Levi Strauss & Co
(NYSE:LEVI)66Neutral
Positive Factors
Brand Health
Levi's brand health remains intact, with growth ahead of the global denim market, and key growth drivers including looser pant fits and a broadened lifestyle assortment.
Earnings
LEVI posted a 4Q EPS beat driven by considerable topline upside and continued gross margin outperformance on lower product costs, mix shift, and higher full price sales.
Negative Factors
Guidance
Negative stock reaction and low valuation feel fair considering below-Street initial '25e guidance and lack of anticipated '25e topline growth.
Levi Strauss & Co (LEVI) vs. S&P 500 (SPY)
Market Cap
$6.55B
Dividend Yield3.08%
Average Volume (3M)2.32M
Price to Earnings (P/E)31.6
Beta (1Y)1.01
Revenue Growth2.96%
EPS Growth-15.58%
CountryUS
Employees18,700
SectorConsumer Cyclical
Sector Strength53
IndustryApparel & Luxury
Share Statistics
EPS (TTM)0.52
Shares Outstanding104,566,640
10 Day Avg. Volume1,936,759
30 Day Avg. Volume2,323,618
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.07
Price to Cash Flow (P/CF)5.70
P/FCF Ratio5.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$21.00Price Target Upside26.05% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Levi Strauss & Co Business Overview & Revenue Model
Company DescriptionLevi Strauss & Co. engages in the design, marketing, and sale of apparel products. The company offers jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear, and related accessories. It operates through the following geographical segments: Americas, Europe, and Asia. The company was founded by Levi Strauss in 1853 and is headquartered in San Francisco, CA.
How the Company Makes MoneyLevi Strauss & Co generates revenue primarily through the design, marketing, and retailing of its apparel and accessories. The company's key revenue streams include direct-to-consumer sales via its owned retail stores and e-commerce platforms, as well as wholesale sales to department stores, specialty retailers, and third-party e-commerce sites. Levi Strauss & Co also benefits from licensing agreements, which allow partners to produce and sell products under the Levi's brand. Significant factors contributing to earnings include brand strength, global distribution networks, and strategic partnerships with retailers worldwide.
Levi Strauss & Co Financial Statement Overview
Summary
Levi Strauss & Co presents a solid financial position with stable revenue growth and strong cash flow generation. While there are pressures on profit margins and a slight decline in return on equity, the company maintains a balanced leverage and efficient cash management.Income Statement
Levi Strauss & Co has shown stable revenue growth with a slight increase from $6.179 billion to $6.355 billion in the latest period. However, the gross profit margin decreased slightly from 56.9% to 60.0%, and the net profit margin also declined from 4.0% to 3.3%, indicating pressure on profitability. The EBIT and EBITDA margins have also shown a slight compression, reflecting operational challenges.65
Positive
Balance Sheet
The company's balance sheet indicates a moderate debt-to-equity ratio of 1.12, suggesting a balanced leverage position. The return on equity decreased to 10.7% from 12.2%, reflecting a slight decline in equity efficiency. The equity ratio has remained relatively stable, indicating consistent asset management.72
Positive
Cash Flow
Levi Strauss has demonstrated strong cash flow management, with free cash flow increasing significantly to $670.9 million. The operating cash flow to net income ratio is robust, indicating efficient cash management. However, the free cash flow to net income ratio is high, suggesting potential future investment opportunities or debt reduction strategies.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.36B | 6.18B | 6.17B | 5.76B | 4.45B | Gross Profit |
| 3.82B | 3.52B | 3.55B | 3.35B | 2.35B | EBIT |
| 264.10M | 353.30M | 646.50M | 686.21M | -17.18M | EBITDA |
| 264.10M | 476.40M | 834.20M | 796.31M | 34.20M | Net Income Common Stockholders |
| 210.60M | 249.60M | 569.10M | 553.54M | -127.14M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 690.00M | 398.80M | 500.20M | 901.82M | 1.59B | Total Assets |
| 6.38B | 6.05B | 6.04B | 5.90B | 5.64B | Total Debt |
| 2.21B | 2.18B | 2.08B | 2.24B | 2.66B | Net Debt |
| 1.52B | 1.78B | 1.65B | 1.43B | 1.16B | Total Liabilities |
| 4.41B | 4.01B | 4.13B | 4.23B | 4.34B | Stockholders Equity |
| 1.97B | 2.05B | 1.90B | 1.67B | 1.30B |
| Cash Flow | Free Cash Flow | |||
| 670.90M | 120.00M | -39.00M | 570.32M | 339.20M | Operating Cash Flow |
| 898.40M | 435.50M | 228.10M | 737.26M | 469.59M | Investing Cash Flow |
| -281.10M | -240.70M | -235.70M | -571.81M | -188.56M | Financing Cash Flow |
| -319.30M | -214.10M | -365.40M | -840.89M | 286.00M |
Levi Strauss & Co Technical Analysis
Negative
16.66
Price Trends
17.77
Negative
17.54
Negative
18.67
Negative
Market Momentum
-0.23
Positive
38.12
Neutral
9.34
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEVI, the sentiment is Negative. The current price of 16.66 is below the 20-day moving average (MA) of 18.00, below the 50-day MA of 17.77, and below the 200-day MA of 18.67, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 38.12 is Neutral, neither overbought nor oversold. The STOCH value of 9.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LEVI.
Levi Strauss & Co Risk Analysis
Levi Strauss & Co disclosed 51 risk factors in its most recent earnings report. Levi Strauss & Co reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Levi Strauss & Co Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $15.61B | 23.04 | 27.75% | 1.23% | 5.23% | 24.63% | |
71 Outperform | $4.61B | 21.81 | 12.01% | 1.44% | -3.35% | -6.09% | |
67 Neutral | $3.46B | 14.33 | 61.44% | 3.23% | 0.07% | 7.19% | |
67 Neutral | $3.90B | 5.71 | 13.48% | 0.21% | -4.83% | 45.23% | |
66 Neutral | $6.55B | 31.62 | 10.69% | 3.08% | 2.96% | -15.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
58 Neutral | $8.78B | ― | -27.21% | 1.60% | -8.42% | 57.91% |
* Consumer Cyclical Sector Average
Performance Comparison
LEVI
Levi Strauss & Co
16.66
-1.18
-6.61%
COLM
Columbia Sportswear
84.36
4.56
5.71%
PVH
PVH
71.26
-64.02
-47.32%
RL
Ralph Lauren
250.45
73.69
41.69%
VFC
VF
23.45
7.71
48.98%
KTB
Kontoor Brands
61.62
1.46
2.43%
Levi Strauss & Co Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -7.24% | Next Earnings Date: Apr 3, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive outlook with strong growth in key areas such as direct-to-consumer, women's business, and gross margin achievements. However, challenges remain in managing SG&A expenses, navigating the wholesale channel, and addressing issues in China. The strategic exits of Denizen and the footwear business also present short-term revenue headwinds.Highlights
Strong Q4 Revenue Growth
Net revenues increased 12% on a reported basis and 8% on an organic basis in Q4, marking a strong finish to the fiscal year.
Record Gross Margin Achieved
The all-time record gross margin of 61.3% was achieved, reflecting a 350 basis point expansion compared to the previous year.
Women's Business Momentum
The Levi's women's business grew 12% in Q4, reaching nearly $2 billion in sales for the full year, marking a significant milestone as Levi's becomes the number one women's denim brand.
Direct-to-Consumer Growth
Global direct-to-consumer business posted its 11th consecutive quarter of positive comps, with a 14% growth in Q4, achieving 11% growth for the full year.
E-commerce Expansion
E-commerce grew 14% in Q4, contributing to strong overall DTC performance and further margin expansion in 2024.
Lowlights
SG&A Expense Increase
SG&A expenses in Q4 increased 17% year-over-year, driven by higher sales volume, advertising, distribution expenses, and compensation incentives.
Challenges in China
Operating margin in Asia contracted by 360 basis points due to losses in China and higher spend on DTC expansion and advertising.
Wholesale Channel Volatility
Despite growth in Q4, the wholesale channel is approached with caution due to past volatility, with expectations for flat performance in 2025.
Impact of Denizen and Footwear Exits
The exit of Denizen and the footwear business is expected to result in a combined 300 basis point headwind to reported net revenues in 2025.
Company Guidance
During the fourth quarter and fiscal year-end call for Levi Strauss & Company, the company reported strong financial results and provided guidance for 2025. For the fourth quarter, net revenues increased by 12% on a reported basis and 8% on an organic basis, excluding the impacts of the Denizen business exit, footwear exit, 53rd week, and foreign exchange headwinds. For the full year, organic net revenue grew by 3%, with a record gross margin of 60% and adjusted EBIT margin expansion of 120 basis points, leading to a double-digit increase in earnings per share to $1.25. Looking forward to 2025, Levi Strauss expects organic net revenue growth of 3.5% to 4.5%, with reported net revenues expected to be down 1% to 2% due to currency and other headwinds. Gross margin is anticipated to expand by 100 basis points to approximately 61%, with an adjusted EBIT margin of around 10.9% to 11.1%. The company plans to continue its DTC-first strategy, with high single-digit organic growth in direct-to-consumer channels and a cautious approach to wholesale, expecting it to be flat for the year. The effective tax rate is expected to be approximately 23%, with adjusted diluted EPS in the range of $1.20 to $1.25.Levi Strauss & Co Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Levi Strauss & Co Announces Strategic Leadership Changes
Positive
Feb 11, 2025
On February 11, 2025, Levi Strauss & Co. announced the retirement of Liz O’Neill as Executive Vice President and Chief Operations Officer, effective March 1, 2025, with her continuing to consult the company until August 1, 2025. The company’s strategic leadership changes aim to accelerate its transformation into a top-tier omnichannel retailer, focusing on aligning its structure with strategic priorities to drive sustainable growth. Key organizational changes include expanded roles for several executives to enhance digital capabilities, streamline processes, and improve operational excellence. These changes are expected to unlock speed and innovation, furthering Levi’s commitment to becoming a leading denim lifestyle brand.
Executive/Board ChangesBusiness Operations and Strategy
Levi Strauss & Co. Elects New Board Member
Positive
Jan 22, 2025
On January 17, 2025, Levi Strauss & Co. announced the election of Artemis Patrick to its Board of Directors, effective February 1, 2025. Patrick, who is the CEO of Sephora North America, will also serve on the Board’s Audit and Nominating, Governance and Corporate Citizenship Committees starting March 1, 2025. Her appointment is viewed as a strategic move to enhance LS&Co.’s position in the retail and apparel industries, leveraging her extensive experience in merchandising, brand building, partnerships, and e-commerce to support the company’s transformation into a leading omnichannel retailer.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.