earnings summary

Levi Strauss & Co. reported better-than-expected Q1 2024 results, with revenues of $1.6 billion, down 8% on a constant currency basis due to a $100 million shift from Q2 into Q1 in the prior year related to an ERP implementation. Excluding this shift and the impact from exiting the Denizen business in Russia, Q1 revenues were flat. Adjusted diluted EPS of $0.26 exceeded expectations driven by gross margin expansion of 240 basis points and prudent expense management.

Key themes and trends:

• Strong momentum in global direct-to-consumer (DTC) business, with 8 consecutive quarters of robust comp growth. U.S. DTC was up 10%.
• E-commerce grew 12% on top of mid-teens growth last year.
• Acceleration in overall women’s business, up 14% in DTC globally.
• Continued stabilization in U.S. wholesale for the Levi’s brand, up low single digits.
• Levi’s gaining market share in the U.S., up 2 points in men’s and 1 point in women’s. Jeans category has stabilized.
• Strong product innovation resonating with consumers across denim bottoms, tops, and non-denim categories.

Earnings guidance:

• Gross margin guidance raised to up about 150 basis points for fiscal 2024.
• Adjusted diluted EPS guidance increased to $1.17 to $1.27.
• Revenue outlook affirmed at 1-3% growth.

Competitive analysis and market conditions were not discussed in detail. The management sounded optimistic about market share gains, the stabilization of the U.S. jeans category, and expectations for the global denim market to grow at a mid-single digit rate going forward. Levi’s believes it can grow ahead of the category.

Overall, Levi’s Q1 results demonstrated solid execution of its strategic priorities to lead with brands, become a DTC-first company, and diversify its business across geographies, categories and channels. The company appears well-positioned to capture growth opportunities ahead.