Levi Strauss & Co. (NYSE:LEVI) recently revealed its fourth quarter earnings for the fiscal year 2024, and the results are notable for several reasons. Announced on January 29, 2025, the blue-jean maker not only met but also exceeded analysts' expectations, reporting earnings per share (EPS) of $0.50 against forecasts of $0.48. This performance reflects the company's strategic focus on its core Levi’s brand and direct-to-consumer (DTC) initiatives.
CEO Michelle Gass opened the earnings call by confirming the company's resiliency and the effectiveness of its strategies. "We delivered strong Q4 results, including through the holiday season... our strategies are driving momentum, and we are entering 2025 from a position of strength," she stated. This optimism is backed by impressive financial figures, with net revenues up 12% on a reported basis, showcasing the company’s ability to capitalize on market demand.
For the complete fiscal year ending December 1, 2024, Levi Strauss reported mid-single-digit growth, driven by strong sales across all geographical regions and product categories. The company’s focus on DTC growth is yielding tangible results; Gass reported strong traction with DTC, which represented approximately 47% of total net revenues, reflecting a year-over-year growth. "DTC momentum continued through the year, and we saw strong double-digit growth," she noted.
The holiday season also brought good news, as sales during November and December surged by 8%. This marked the strongest performance for Levi Strauss during this period over the past decade. The strategic adoption of thorough planning and innovative marketing ensured the success of their holiday assortments, helping them navigate through what is often the most competitive retail season of the year.
One key aspect of Levi Strauss's strategy includes partnerships with famous personalities, solidifying the brand’s presence within cultural discourse. One such partnership is with international star Beyoncé, which has resulted in significant brand visibility. "The Levi’s brand was up 8%, with significant growth across categories and genders," Gass remarked on the impact of these collaborations.
Throughout 2024, Levi Strauss implemented substantial changes aimed at enhancing its product lineup. Gass elaborated on this transformation, emphasizing the company’s commitment to becoming more of a lifestyle brand, extending its offerings beyond denim. "We are making great progress on transforming our offerings... to reposition the company as not just synonymous with jeans, but as a complete lifestyle brand rooted in denim," she stated.
Despite these achievements, the company is concurrently addressing challenges. Levi Strauss has announced the planned exit of certain product lines, such as Denizen and footwear, reflecting the firm’s strategy to streamline operations and focus on more profitable ventures. CFO Harmit Singh noted, "Denizen’s exit started at the beginning of ’24... we believe most of it we have exited already." This rationalization is aimed at improving overall efficiency and retaining focus on core business segments.
The financial success and bullish outlook of Levi Strauss have drawn attention from various equity analysts. On the stock market front, various investment firms have revised their price targets. Barclays recently lowered their forecast from $24 to $22, maintaining their 'overweight' rating on the stock. Similarly, Telsey Advisory Group and TD Cowen have also decreased their target prices to $23, with the latter asserting the potential for growth.
Overall, Levi Strauss has managed to navigate and adapt to shifting consumer demands, evidenced by its broadened product offerings and enhanced marketing strategies. The firm ended the year with solid financial stability, establishing itself as strong heading toward 2025. Gass expressed optimism about the direction of the company, highlighting the importance of DTC initiatives and product innovation as driving forces behind its strategy. "We’re excited about our growth potential for the coming year and the continued efforts to consolidate our position as both a leader and innovator within the apparel industry," she concluded.
With all these advancements, Levi Strauss positions itself not only as a stalwart of denim but also as an ambitious player willing to expand its footprint within the broader lifestyle apparel market. Stakeholders and industry watchers alike will be carefully observing how these initiatives translate onto the balance sheet as the company progresses through the following fiscal year.