Levi Strauss & Co. Q4 2024: Navigating Contradictions in Margins, Wholesale Performance, and DTC Strategies

These are the key contradictions discussed in Levi Strauss & Co.'s latest 2024 Q4 earnings call, specifically including: Gross Margin Expansion Expectations, U.S. Wholesale Performance, DTC Profitability, and Product Assortment Strategy:



Revenue Growth and Product Strategy:
- Levi Strauss & Co. reported a 12% increase in net revenues on a reported basis for Q4, with an 8% organic growth excluding non-comparable items.
- This growth was driven by a strong focus on core strategies, including sharpening the focus on the Levi's brand, expanding the direct-to-consumer (DTC) transformation, and stabilizing wholesale channel trends.

Brand and Product Momentum:
- The Levi's brand saw an 8% increase, driven by strong growth across categories and genders, with notable performance in women's, which delivered nearly $2 billion in sales for the full year.
- This was supported by a breakthrough campaign with global icon Beyoncé, reaffirming Levi's place at the center of culture and driving demand across the business.

DTC and Wholesale Performance:
- Direct-to-consumer (DTC) business delivered a 14% increase in Q4, marking the 11th consecutive quarter of positive comps, and accounted for 47% of total global net revenues.
- The wholesale channel returned to growth, with the Levi's brand up 4% in U.S. wholesale, driven by better execution and in-stock positions.

Operational Excellence and Cost Management:
- Operating margins improved by 270 basis points to 26.5% in the Americas segment and 130 basis points to 18.3% in Europe, with gross margins reaching an all-time record of 61.3%.
- Gross margin expansion was driven by lower product costs, structural shifts to DTC, and the benefit from exiting lower-margin businesses, leading to a $1.25 earnings per share increase.