Question · Q3 2025
Ike Boruchal focused on Levi Strauss & Co.'s SG&A costs, specifically asking about the distribution line running at 7% of sales, the moving pieces related to warehousing and DCs, and the timeline for margin benefits from these initiatives. He also inquired about a timeline for the company's return to a 15% EBIT margin.
Answer
Harmit Singh, Chief Financial and Growth Officer, explained that Q3 gross margin expansion was driven by structural mix, targeted pricing, higher full-price selling, and FX benefits, offsetting tariff headwinds. Regarding SG&A, he noted that gross profit dollars are growing faster than SG&A dollars. Distribution costs increased due to a reclassification for e-commerce, volume, and parallel DC running during network transformation. He expects parallel DC operations to ramp down by early Q1 2026. Singh outlined the path to 15% EBIT margin through continued gross margin expansion, SG&A leverage, and strategic advertising reinvestment.