The following is a summary of the Levi Strauss & Co. (LEVI) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Q3 net revenues increased 2% in constant currency and 3% after adjusting for the exit of the Denizen business, with record Q3 gross margins of 60%.

• Adjusted EBIT margin expanded by 250 basis points and double-digit adjusted diluted EPS growth was achieved.

• Despite a $0.05 headwind from taxes, significant margin expansion was delivered, generating much higher cash flow through the first nine months of 2024.

Business Progress:

• A transformational pivot to operating as a DTC first company is underway, including an evaluation of strategic alternatives for the global Dockers business.

• Levi's brand achieved a global growth of 5% in Q3, its best quarterly growth in two years, and Levi's women's business grew 11%.

• Accelerated investment in new products and partnerships, such as the Reimagined campaign with Beyoncé, to enhance brand relevance and market penetration.

Opportunities:

• Focused on maximizing the potential of Levi's brand and Beyond Yoga, and exploring strategic alternatives for Dockers, aiming to streamline and focus the business for enhanced growth and profitability.

• Continuing to capitalize on the direct-to-consumer (DTC) growth, which saw a 12% increase, supported by expansion in e-commerce and increased consumer engagement.

Risks:

• Encountered underperformances in Dockers, China, and Mexico impacting projections. Issues such as cybersecurity breaches have affected shipping and operations in Mexico.

• Economic factors and macroeconomic challenges in China affecting the performance and growth expectations in the region.

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