The company expects its gross margin to expand by 100 basis points (bps), reaching approximately 61.6 per cent, up from a base of 60.6 per cent. The adjusted EBIT margin is projected to rise to between 11.4 and 11.6 per cent YoY, revised upward from the original guidance of 10.9 to 11.1 per cent, which was based on a 10.2 per cent base.
The adjusted diluted earnings per share (EPS) is projected between $1.20 and $1.25, including an estimated $0.20 impact from foreign exchange (FX) and a higher tax rate. The updated outlook excludes any potential impact from the recently announced tariffs, Levi Strauss said in a press release.
In the first quarter (Q1) of 2025, the company generated revenue of $1.5 billion, marking a 3 per cent increase on a reported basis and 9 per cent growth on an organic basis compared to Q1 2024.
The Levi’s brand was up 8 per cent globally on an organic basis. The gross margin increased 330 bps to 62.1 per cent from 58.8 per cent in Q1 2024 primarily driven by lower product costs and favourable channel and brand mix.
Region-wise, Americas net revenues increased 6 per cent on a reported basis and 11 per cent on an organic basis. Within the Americas, the US grew 8 per cent on an organic basis. In Europe, net revenues decreased 5 per cent on a reported basis and increased 3 per cent on an organic basis. Asia’s net revenues increased 7 per cent on a reported basis and 10 per cent on an organic basis.
Brand-wise, Beyond Yoga’s net revenues increased 10 per cent on a reported and organic basis.
Channel-wise, direct-to-consumer (DTC) net revenues increased 9 per cent on a reported basis and 12 per cent on an organic basis. DTC growth on an organic basis reflected an 8 per cent increase in the US, an 11 per cent increase in Europe and a 14 per cent increase in Asia.
Net revenues from e-commerce grew 13 per cent on a reported basis and 16 per cent on an organic basis. DTC comprised 52 per cent of total net revenues in the first quarter. Wholesale net revenues decreased 3 per cent on a reported basis and increased 5 per cent on an organic basis.
The operating margin of the company in Q1 2025 was 12.5 per cent compared to 0.04 per cent in Q1 2024. Adjusted EBIT margin increased 400 bps to 13.4 per cent from 9.4 per cent last year on a reported basis primarily due to higher gross margin.
Selling, general and administrative (SG&A) expenses were $749 million compared to $756 million in Q1 2024. Adjusted SG&A was up 1.7 per cent to $744 million compared to $731 million last year. As a percentage of sales, adjusted SG&A was 48.7 per cent compared to 49.4 per cent last year.
The company’s net income from continuing operations was $140 million compared to net loss from continuing operations of $10 million in Q1 2024. Adjusted net income was $150 million compared to $100 million in Q1 2024. Diluted EPS from continuing operations was $0.35 compared to diluted loss per share from continuing operations of $0.03 in Q1 2024. Adjusted diluted EPS was $0.38 compared to $0.25 in Q1 2024.
ALCHEMPro News Desk (SG)
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