Executive Summary

Q1 2025 delivered top-line growth and a significant profitability inflection: net revenues up 3% reported (9% organic), gross margin rose 330 bps to 62.1%, and adjusted EBIT margin expanded 400 bps to 13.4% . EPS from continuing operations was $0.35 and adjusted diluted EPS was $0.38, up 52% YoY .
Against S&P Global consensus, EPS materially beat (Actual $0.38 vs $0.278*) while revenue was modestly below (Actual $1.527B vs $1.539B*); EBITDA beat meaningfully (Actual $253.1mm vs $202.5mm*) — driven by lower product costs, favorable mix, and higher full‑price sell-through . Values retrieved from S&P Global.
Management maintained FY25 guidance (ex‑Dockers) and excluded recent tariffs; CFO flagged “minimal impact” to Q2 margins with inventory already secured for spring/summer; Q2 organic revenue guided +3.5% to +4.5% with adjusted EPS of $0.11–$0.13 .
Strategic actions continue: Dockers reclassified to discontinued operations (sale process underway), DTC reached 52% of revenue, women’s continued double‑digit growth, and ratings upgrade to investment grade by Fitch enhances financial flexibility .

What Went Well and What Went Wrong

What Went Well

Margin expansion and earnings upside: gross margin 62.1% (+330 bps YoY) and adjusted EBIT margin 13.4% (+400 bps YoY); adjusted diluted EPS $0.38, +52% YoY .
DTC and women’s momentum: DTC net revenues +9% reported (+12% organic), now 52% of revenue; Levi’s brand +8% organic; women’s growth remained double‑digit, with tops up 7% and broader head‑to‑toe lifestyle traction .
CFO confidence and guidance maintained despite tariffs: “minimal impact” to Q2 margins and FY25 targets unchanged (ex‑Dockers), reflecting strong mix and secured inventory positioning .

What Went Wrong

Europe reported net revenues −5% (though +3% organic), reflecting FX and the prior exit of footwear; wholesale shipments were impacted by DC transitions but expected to return to growth in Q2 .
Dockers classified as discontinued operations with net loss in Q1 and breakeven EBIT margin on an allocated basis historically; sale process underway to simplify portfolio .
Tariff uncertainty: management assembled a task force to mitigate via cost structure, vendor/customer negotiations, and surgical pricing; sourcing exposure is diversified but visibility remains fluid .

Financial Results

Revenue, Margins, EPS – prior quarters and current

Metric	Q3 2024	Q4 2024	Q1 2025
Net Revenues ($USD Millions)	$1,516.8	$1,839.7	$1,526.8
Gross Margin %	60.0%	61.3%	62.1%
Adjusted EBIT Margin %	11.6%	13.4%	13.4%
Adjusted Diluted EPS ($)	$0.33	$0.50	$0.38

Q1 2025 vs Estimates (S&P Global)

Metric	Consensus	Actual	Result
Primary EPS ($)	0.278*	0.38	Beat
Revenue ($USD)	1,539.1mm*	1,526.8mm	Miss (−0.8%)
EBITDA ($USD)	202.5mm*	253.1mm	Beat (+25%)

Values retrieved from S&P Global.
Note: Company EPS presented is adjusted diluted EPS.

Segment Performance (Q1 2025 vs Q1 2024)

Segment	Net Revenues Q1’25 ($mm)	Net Revenues Q1’24 ($mm)	Reported Change	Organic Change	Operating Income Q1’25 ($mm)	Operating Income Q1’24 ($mm)
Americas	$783.0	$735.8	+6%	+11%	$170	$132
Europe	$400.5	$423.5	−5%	+3%	$102	$104
Asia	$308.1	$288.8	+7%	+10%	$58	$48
Beyond Yoga®	$35.2	$32.1	+10%	+10%	$(3)	$(1)

KPIs and Channel Mix

KPI	Q1 2025	Q1 2024
DTC Revenues ($mm)	$787.5	$721.8
Wholesale Revenues ($mm)	$739.3	$758.4
DTC % of Revenue	52%	—
E-commerce Revenue Growth	+13% reported / +16% organic	—

Margin drivers in Q1: lower product costs and favorable channel/brand mix; adjusted SG&A rate improved to 48.7% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Net Revenue Growth	FY 2025	3.5%–4.5%	3.5%–4.5% (continuing ops)	Maintained
Reported Net Revenue	FY 2025	(1%)–(2%)	(1%)–(2%) (continuing ops)	Maintained
Gross Margin	FY 2025	+100 bps to ~61.0% from 60.0% base	+100 bps to ~61.6% from 60.6% base	Base updated (Dockers excluded)
Adjusted EBIT Margin	FY 2025	10.9%–11.1% (from 10.2% base)	11.4%–11.6% (from 10.7% base)	Raised (on continuing ops base)
Tax Rate	FY 2025	~23%	~23%	Maintained
Adjusted Diluted EPS	FY 2025	$1.20–$1.25 (≈$0.20 FX impact)	$1.20–$1.25 (≈$0.20 FX impact)	Maintained
Organic Net Revenue Growth	Q2 2025	—	3.5%–4.5%	New quarterly outlook
Reported Net Revenue	Q2 2025	—	Flat to +1% implied (FX −2 pts; divestitures −1.5 pts)	New quarterly outlook
Gross Margin	Q2 2025	—	+80–100 bps	New quarterly outlook
Adjusted EBIT Margin	Q2 2025	—	5.5%–6%	New quarterly outlook
Adjusted Diluted EPS	Q2 2025	—	$0.11–$0.13 (≈$0.03 FX headwind)	New quarterly outlook

Note: FY25 guidance excludes recent tariffs; Dockers reported in discontinued operations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
DTC transformation	DTC up 12% (Q3), margin +350 bps; 11th consecutive comp; targeting 55% mix	DTC up 12% organic; 12th consecutive comp; DTC 52% of revenue	Strengthening trajectory
Women’s and lifestyle expansion	Women’s +11%; tops +8% (Q3); holiday pipeline accelerated (Q4)	Women’s double‑digit; tops +7%; dresses/skirts growing; head‑to‑toe assortment gaining	Broadening mix and share gains
Tariffs/macro	Port/supply chain vigilance (Q3); prudent FY planning (Q4)	Task force on tariffs; minimal Q2 margin impact; diversified sourcing (China ~1%, Mexico ~5% into U.S.)	Managing uncertainty; limited near-term effect
Europe	Return to growth (Q3); strong DTC/wholesale, positive prebooks (Q4)	Q1 reported −5% but +3% organic; wholesale to return to growth in Q2	Improving through DC transition
China	Reset and leadership change (Q3 and Q4)	Flat YoY in Q1; modest expectations for ’25	Stabilizing at low base
Portfolio actions	Review of Dockers; exit Denizen/footwear (Q3/Q4)	Dockers in discontinued ops; sale process underway	Focused portfolio; margin accretive mix

Management Commentary

“We exceeded revenue and profitability expectations in Q1… The Levi’s® brand is stronger than ever… our global footprint, strong margin structure, and agile supply chain position us to navigate the balance of the year and beyond.” — Michelle Gass, CEO .
“Direct-to-consumer EBIT margins grew 500 basis points… Gross margin was a record at 62.1%… Looking forward, we are maintaining our 2025 top- and bottom-line guidance… and we anticipate minimal impact to our Q2 margin outlook.” — Harmit Singh, CFO .
On tariffs: “We have a task force… identify levers to mitigate… cost structure, vendor/customer negotiations, surgical pricing… We source from over 28 countries.” — Michelle Gass . “Into the U.S.: China ~1%, Mexico ~5%, Vietnam mid‑ to high‑single digits.” — Harmit Singh .

Q&A Highlights

Tariff mitigation and pricing power: Management will pursue structural cost actions, vendor/customer engagement, and surgical pricing; AURs already rising on premium product; ability to test price elasticity in DTC .
Inventory and wholesale order visibility: Inventory +7% YoY with spring/summer secured; no change in wholesale orders; Europe wholesale to return to growth in Q2 with positive prebooks .
DTC profitability drivers: Streamlined selling model, refined labor, improved systems; e‑commerce fully‑loaded profitability now low double digits .
U.S. wholesale outlook: Expect prudent flat outcome in ’25; growth opportunities in women’s and tops; working to grow Levi’s at mass post‑Denizen exit .
Cost structure flexibility: Fixed vs variable ~65–70% fixed historically; evaluating levers across cost initiatives, stakeholders, and pricing options .

Estimates Context

Q1 2025 vs consensus: EPS $0.38 vs $0.278* (Beat); Revenue $1,526.8mm vs $1,539.1mm* (Miss); EBITDA $253.1mm vs $202.5mm* (Beat) . Values retrieved from S&P Global.
Implications: Expect upward revisions to EBITDA and margin forecasts given structural mix (higher DTC/international/women’s) and cost actions; revenue miss modest and channel mix improving .

Key Takeaways for Investors

Margin engine is working: record gross margin and sustained adjusted EBIT margin at 13.4% with DTC EBIT margin +500 bps — favoring EPS resilience even if top-line faces FX/tariff noise .
Mix shift continues: DTC 52% of sales, women’s/tops/lifestyle growth diversifies revenue and supports premium AURs and full-price sell-through .
Europe set to improve: organic growth already positive; wholesale impacted by DC transition should resume growth in Q2 — a potential near-term catalyst .
Tariffs: near-term impact to Q2 margins minimal with inventory secured; diversified sourcing and surgical pricing levers reduce downside risk .
Portfolio simplification: Dockers exit (discontinued ops) and prior divestitures (Denizen/footwear) enhance structural economics and raise FY25 margin targets .
Capital returns and balance sheet: dividend maintained ($0.13/share), buybacks continued, cash $574mm; Fitch investment grade upgrade (BBB−) adds financial flexibility .
Trading lens: Focus on margin durability and DTC KPIs; watch tariff developments, Europe wholesale normalization, and women’s/tops momentum as key narrative drivers .

Appendix: Discontinued Operations and Non‑GAAP Reconciliations

Dockers reclassified to discontinued operations; Q1 discontinued net loss $(5.2)mm; FY24 recast shown for continuing/discontinued ops .
Adjusted metrics reconciliations provided for SG&A, EBIT/EBITDA, net income, EPS, FCF, and ROIC (see release tables) .

LEVI STRAUSS & CO (LEVI)·Q1 2025 Earnings Summary