Levi Strauss & Co (LEVI) Citi 2025 Global Consumer & Retail Conference summary

Transformation and strategic focus

• 2024 marked a year of transformation, with a focus on adapting to changing consumer dynamics, regulatory environments, and technology shifts.

• The company is narrowing its focus by exiting low-margin businesses such as Denizen, Dockers, and a small European footwear line, aiming to complete these exits by 2025.

• Leadership changes have aligned the structure to support a DTC-first strategy, with new roles to drive product, merchandising, and supply planning.

• Productivity initiatives include reducing store associate tasks, optimizing assortments, and driving higher revenue per square foot.

• The transformation is expected to support growth from $6 billion to $10 billion in revenue and expand operating margins to about 15%.

Direct-to-consumer (DTC) and channel strategy

• DTC, including stores and e-commerce, grew to 47% of business in 2023 and is targeted to exceed 55%.

• DTC margins improved from low teens to high teens, with e-commerce now delivering low double-digit margins.

• DTC is expected to grow in the high single digits, while wholesale is forecasted to remain flat in 2025.

• Organizational structure includes dedicated heads for retail, wholesale, and e-commerce under regional cluster heads.

• Productivity in DTC is a key focus, aiming to close the margin gap with wholesale.

Sourcing, tariffs, and cost management

• Sourcing is diversified across 25 countries, with no single country exceeding 20% exposure; China now accounts for less than 1% of US imports.

• Tariff volatility is managed through cross-sourcing and selective price increases, with 2025 expected to be manageable under current conditions.

• Distribution expenses are targeted to decrease as new automated distribution centers ramp up, with cost reductions expected in the second half of the year.

• Stranded costs are being addressed as part of the ongoing transformation.