<\/p>\n
\n\tMaybe it\u2019s all that time at Levi\u2019s Stadium, which hosted the Super Bowl this year, but Michelle Gass is starting to sound just a little bit like a coach keeping her team pumped up at Levi Strauss & Co.<\/p>\n
\n\t\u201cWe\u2019ve put a lot of proof points on the board over the last year and a half,\u201d said Gass, chief executive officer, in an interview with WWD.<\/p>\n
\n\tMost recently, it was the first quarter, which came in stronger than expected on Tuesday with organic sales up 9 percent, while earnings per share topped analysts\u2019 expectations. The retailer also pushed up guidance for the full year.\u00a0<\/p>\n
\n\tPerhaps more importantly, the quarter felt familiar as the company has posted a nice string of gains as it evolved under Gass\u2019 leadership. <\/p>\n
\n\t\u201cWe\u2019ve talked about our key strategies around becoming a DTC first company, evolving from a denim\u2019s bottoms business to head-to-toe denim lifestyle,\u201d Gass said. \u201cThe consumer is responding.\u00a0<\/p>\n
\n\t\u201cWe\u2019ve hit a real inflection point with DTC now being more than half of our business,\u201d she said. \u201cThat was true for the quarter. We expect it to be true for the year.\u00a0<\/p>\n
\n\t\u201cAs we look ahead in this next phase, it\u2019s all about execution. We don\u2019t need a new strategy. Our strategies are working and there is a ton of runway ahead within those opportunities. So it gives us real confidence that I think investors can count on us delivering consistent results as we march toward the $10 billion [sales] target and the 15 percent target\u201d for margins on earnings before interest and taxes.<\/p>\n
\t\t\t\t\tMichelle Gass<\/p>\n
\n\tNet income for the quarter rose 30.2 percent to $175.8 million from $135 million a year earlier.\u00a0<\/p>\n
\n\tContinuing operations posted adjusted earnings per diluted share of 42 cents \u2014 5 cents ahead of the 37 cents Wall Street analysts anticipated, according to Yahoo Finance.<\/p>\n
\n\tNet sales for the three months ended March 1 increased 14 percent to $1.7 billion.<\/p>\n
\n\tInvestors approved, sending shares of the company up 6.3 percent to $20.95 in after-hours trading.<\/p>\n
\n\tBy region, organic sales in the Americas were up 7 percent to $856 million, while Europe was up 10 percent to $496 million and Asia was ahead 12 percent to $347 million. Sales at the Beyond Yoga brand, which Levi\u2019s acquired in 2021, rose 23 percent to $43 million.\u00a0<\/p>\n
\n\tThe Americas was the most profitable division, although its operating earnings slipped 4 percent to $163 million. Those declines were more than offset by gains in Europe, where operating profits were up 26 percent to $129 million, and in Asia, up 22 percent to $70 million.<\/p>\n
\n\tOverall, the denim company\u2019s adjusted margins on earnings before interest and taxes topped guidance, coming in at 12.5 percent. That marked a decrease from 13.4 percent a year earlier, reflecting both the cost of tariffs and increases in advertising, where spending was front-loaded for the year to support the Behind Every Original.\u00a0<\/p>\n
\n\t\u201cThe Levi\u2019s brand is really strong,\u201d Gass said. \u201cThe brand is hitting a new stride. Shaping culture, participating on the biggest stages, which kicked off earlier this year with the Super Bowl.\u201d<\/p>\n
\n\tThe denim brand decided to really lean in when the final game of the professional football season was hosted on its home turf.\u00a0<\/p>\n
\n\t\u201cWe really wanted to amplify that effect,\u201d the CEO said. \u201cThat is why we did launch our global campaign, which showcases our unique position at the center of culture and really the intersection of sports, fashion and music.\u00a0It garnered 1.4 billion impressions, ranking among the top Super Bowl ads. It wasn\u2019t a Super Bowl ad. It was a launch of a global campaign that we expect to help support our momentum throughout the year.\u201d\u00a0<\/p>\n
\n\tThe quarter made Levi\u2019s more bullish on its business for all of 2026.\u00a0<\/p>\n
\n\tThe company forecast organic sales would rise 4.5 percent to 5.5 percent this year, instead of the 4 percent to 5 percent bump initially projected.\u00a0<\/p>\n
\n\tAnd the range for adjusted earnings per share was nudged up to $1.42 to $1.48 from $1.40 to $1.46.\u00a0<\/p>\n
\n\tGass, the former Kohl\u2019s Corp. CEO who joined Levi\u2019s in 2023 and became CEO a year later, has cut costs, zeroed in on the AI opportunity and doubled down on what have long been seen as the denim brand\u2019s growth areas, including women\u2019s and tops.\u00a0<\/p>\n
\n\tNow she\u2019s getting ready to bid adieu to a key partner, Harmit Singh, who\u2019s been the company\u2019s chief financial officer for 13 years.<\/p>\n
\n\tSingh, who helped steer Levi\u2019s back onto the public market and added the role of chief growth officer in 2023, plans to transition to special adviser when a successor is found and then retire.\u00a0<\/p>\n
\n\t\u201cHarmit will be entering his new chapter, but not quite yet,\u201d Gass said. \u201cWe have launched a search. That will take some time. He\u2019s going to stay in his role, obviously for the foreseeable future. And then once we do find his successor, he will carry on as an adviser. It is really about just kind of laying the groundwork for the transition.\u201d\u00a0<\/p>\n
\n\tThe CEO praised Singh for being a \u201ctrusted leader across the organization\u201d and the \u201chigh-caliber finance team he built.\u201d\u00a0<\/p>\n
\n\tFor now, Singh still has an eagle eye on Levi\u2019s books and is pushing for more of the company\u2019s sales to filter down to the bottom line \u2014 to \u201cdrive a higher flow through,\u201d he said \u2014 while still investing in advertising and new stores.<\/p>\n
\n\t\u201cCompanies like Ralph [Lauren Corp.] and Tapestry [Inc.] have done a great job,\u201d Singh said in the interview. \u201cThey started the journey a couple of years ago and it is not about fewer people, it is about managing the resources we have in a different way, and it\u2019s about making sure our priorities are completely aligned to where the company is.\u201d<\/p>\n
\n\tAI has been a steady part of the conversation at Levi\u2019s for years and Singh said the technology is being put to work in two main areas \u2014 improving the customer experience and driving operational efficiency.\u00a0<\/p>\n
\n\t\u201cThe operational efficiency is largely about automating stuff,\u201d he said. \u201cIt\u2019s about taking some of the redundant manual transactions and using AI.\u201d<\/p>\n
\n\tGass added that: \u201cAI is going to be an important lever so that we can basically grow revenue a lot faster than we grow costs. It\u2019s not about replacing the headcount. It\u2019s about how you get more highly impactful results with the people you have. Now, jobs will evolve, and that\u2019s why we\u2019re training our folks and doing all that, but it\u2019s really around the culture. We\u2019re investing a lot around the culture so that people see their future as the AI enabling\u201d their jobs.<\/p>\n
#Levis #Earnings #Top #Expectations #CFO #Harmit #Singh #Retiring<\/p>\n","protected":false},"excerpt":{"rendered":"
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