00:00It's good to see you. The stock soaring, investors are liking what they see.
00:04Where did the momentum come from, and what's really working right now?
00:08Yeah, well, first, thanks for having me, and I'm really excited to talk about how we started the
00:12year. You know, we are seeing momentum across the board, which is around our strategies really
00:18picking up and accelerating. So we delivered 9% organic growth, 14% on a reported basis.
00:23We are seeing this across geographies. We're seeing this across categories. We're seeing
00:28it across genders. We're seeing it across channels.
00:30Why is this happening?
00:32Well, you know, it's the brand, it's the product, and it's the execution. And all of those things
00:38are working. And I got to tell you, the team is doing a phenomenal job. We're coming off
00:42of a solid year last year, and it's accelerating right into 2026.
00:47Michelle, denim, though, is such a crowded category. Like, I won't go to certain department
00:52stores because it's just too much for me, but I do go to Levi's.
00:56Well, thank you for that.
00:57You're welcome. You're welcome. And I said to you coming in, my 23-year-old,
01:00she's wearing them. That's where she wants to go. You talked about your wife. Like,
01:04you are hitting a lot of different demographics. How do you do that? How do you appeal to so many?
01:09Yeah. Well, I would say it does start with the brand. And we like to say that Levi's operates
01:15at the center of culture. And we're hitting a new stride with the brand. I mean, the brand has
01:20been strong for a long time. Last year, it went up a notch. We had this fantastic partnership
01:25with Beyonce. That moved into a partnership with Shibuzi. And this year, we launched our brand
01:31campaign at the Super Bowl. And it was the perfect time because Levi's Stadium was hosting the Super
01:38Bowl. And we hadn't been on the Super Bowl in over 20 years. But it wasn't about launching an ad
01:42for
01:43the Super Bowl. It was about launching our campaign. And we call it Behind Every Original,
01:48which is a global campaign and leans in to what Levi's does best across sports, across fashion,
01:55and music. And so if you've seen the ad, it really does bring that to life and has artists like
02:01Doshi
02:02or SGA, the basketball superstar. Great. And Rosie. And I like to talk about Rosie because
02:09here is this. She was part of Blackpink, 90 million followers and growing. And we're rolling that right
02:15into a collaboration with her in Asia. So that is taking off as we speak. And so this is about
02:22launching, like I said, a campaign for the year. Looking ahead, we've got World Cup coming up that
02:27the stadium is Levi's Stadium is hosting. We have collaborations. You know, we had our
02:32collaboration with Nike and Jordan a couple months ago. We had people lining out the doors to get the
02:37special collab. Michelle, when you talk about these partnerships with celebrities, with the artists,
02:41I know each one of them is different. But in general, are they coming to you? Or are you
02:45identifying them? And you're going to them? How organic is it? It's all of the above. Well,
02:51so and it happens organically. I mean, literally what? Just at the Brits,
02:56we had Harry Styles, dancers all wearing 501s. I mean, this is about being at the center of culture
03:03and the Beyonce partnership that started because she wrote a song called Levi's Jeans. But we've
03:09been friends with Beyonce for decades back in back to the 90s or Carolyn Bessette were the 517s. And,
03:16you know, in Love Story, it's heavily featured and sales are up like 25%.
03:20Did that surprise you? Like, or when did you first all of a sudden notice? Like we've talked about
03:24this on air, the impact of this. Yeah. Oh, well, the 90s, we've known about the 90s trend for a
03:29long
03:29time. And in fact, when you go into our stores online, go into our wholesale partners, I mean,
03:34that 90s trend is Levi's is all over it from top to bottom. I mean, one of the things we
03:39talk about
03:39when you ask about what's working, we talk about our two key strategies, which is about becoming
03:44a more DTC forward company and also evolving the brand from being about jeans to head to toe. We
03:52say denim lifestyle. What does that mean? It means that we want to give you the whole wardrobe. It
03:57starts with the jeans, but tops, button downs, jackets, outerwear, dresses, all through the lens
04:04of Levi's. But we're playing now in the total apparel space. Perhaps it's a good segue to talk
04:08about the macroeconomic environment and potential disruptions or disruptions you've seen from
04:12higher transportation costs as a result of bringing these products from overseas into the
04:17US and indeed around the world. What has this macroeconomic backdrop over the last five, six
04:22weeks done for your business? Yeah, well, the last year when I think about tariffs. It's been a really
04:27uncertain time. You know, I take a step back, you think about the company, Ellis & Co. We've been
04:33around for 170 years. We've weathered lots of storms and navigate and it goes back to who we are as
04:38a
04:39brand. During times like this, people do. We have to deliver. We have to execute, but they really do
04:43go to brands that they trust, that they love. We offer quality. We offer great value. We offer
04:48durability. To date, our consumer has proven resilient. I mean, you see that in our numbers.
04:53You know, we are bringing them a lot of innovation. I think, you know, if pressures come on the consumer
04:58when the wallets get tighter, you know, we have to up our game, right? Wallets get tighter. We have to
05:04work harder. And that's what we're doing. We offer great red tab right down the middle. We offer
05:10signature by Levi Strauss, which is an awesome value. That business was up 16%. It's in the $20,
05:17$25 range. And then we offer blue tab premium Japanese denim. And, you know, you can buy a pair
05:23of jeans from Levi's now at like $200. So we're serving every customer need, but know that we are
05:28constantly just making sure that we can address the needs of the consumer in the moment, whatever that
05:34moment might be. Love talking fashion, love talking the collaborations. I also, though,
05:37do love the nitty gritty of like supply chains and what a company like you that has been around
05:42for so long and seen a lot of different market cycles. What is your supply chain? And have you
05:47kind of spread it around based on what we've seen, not just in the last year, but even coming off
05:52the
05:52pandemic that reminded us that supply chains can be impacted dramatically when they're focused in one
05:57area? Yeah, that's right. We have a robust, very diversified supply chain across many,
06:03many countries. We have a really strong team that is agile and responsive. And so and these
06:11these relationships with our suppliers go back decades and decades. So we have tremendous partnerships.
06:16And as we've navigated things like tariffs, everybody has stepped up to help us, you know,
06:22determine what the next steps are there, you know, just to just to put it out there on tariffs. I
06:27mean,
06:27everything that we've guided the street includes tariff assumptions on call it the original
06:32reciprocal tariffs at a higher rate at that 20 percent incremental rate. You know, there's been
06:37recent news of it going down back to 10 percent. We haven't baked that into our numbers yet. One can
06:41say that is upside there. Yeah, could mean up to thirty five million dollars in EBIT or seven cents of
06:47EPS. But we've held back just knowing that there still is uncertainty out there, as you were as you
06:52were saying. One question we asked outgoing CFO Harmeet Singh in the last year in the wake of tariffs has
06:56been
06:57about moving production to the United States. He said, no way, that's not happening. Are you sticking
07:01by that? We are sticking by that. Yeah, that is an industry that really has shifted overseas.
07:06And like I said, because we have these enduring, long lasting relationships, I know we'll be able
07:11to navigate whatever's ahead on that front. All right. So, you know, a company like you guys,
07:16our whole Bloomberg team is like, ask Michelle this. But we're curious about your prospects for reaching
07:2110 billion in revenue. Five years? Seven years? How are you guys thinking about it? We have not put
07:27a number out there or a date out there. But you've got some great momentum. Like, do you feel like
07:30you
07:30can take this momentum? And how far can you carry it out if you feel comfortable? Yeah, what I can
07:35say,
07:35and we have, I think it's important to have bold goals, right? So we've put the 10 billion,
07:39we've put the 15 percent EBIT. I think if you look at the progress over the last couple of years,
07:44take revenue. We came off of 7 percent growth last year. That was up from the prior year.
07:49This year, we're again guiding mid-single digits. We just had a blowout quarter at up 9 percent.
07:54So I think it's safe to say that you can count on consistent, sustainable growth.
07:58And then on EBIT, on profitability, we're making that march to 15 percent. Again, a few years ago,
08:04we were 9, 10 percent. Last year, about 11 and a half. We put them, we just said, we're taking
08:09our
08:09guide up yesterday to 12 percent. So you see that sequential progress and, you know, keep doing that.
08:15We'll let you guys do the math, but we're confident. I mean, like I said, the exciting
08:20thing we are right now, the strategies are working. We've made some choices the last couple of years.
08:26We've, you know, we sold the Dockers brand so that we could really focus on the Levi's brand. And
08:31there's so much opportunity. So certainly fashion is working in your favor right now,
08:35but we know the industry is fickle and consumers are fickle. What happens, or what do you do rather,
08:41to make sure that when the trends do change, you move with them? Yeah. Well, as the category
08:46leader in denim, let's start there. It's our responsibility to fuel the trends. You know,
08:50the denim category is growing. It's accelerating right now. I have more denim in my, no, seriously.
08:56But nowadays, I think a big part of it. In my wardrobe that I haven't, in a long, long time,
09:00and I keep buying more. But it's not always like that. No, it's not. But I would say, though,
09:02but this evolution to denim lifestyle, or I'll say lifestyle, head to toe, that's not all denim,
09:09right? It is, fine, if you're buying a rib cage, wide leg pair of jeans, what's the perfect top
09:15that goes with it, which is going to be different than a low rise. And so now that we're playing
09:19in
09:19this broader space, which basically increases our addressable market by 15x, we're playing in that
09:271 trillion market in apparel. That requires focus and discipline, but we really up-leveled our
09:32capabilities to do that. And, you know, if you just take this last quarter, our tops business was up
09:3813%. It's only 20% of our business. So when you think about all that upside, so we now, and
09:4440%
09:44of our business is non-denim. So it's not just denim anymore for Levi's.
09:49So what is the biggest opportunity or categories that are not yet tapped that could be big for you
09:54guys? Yeah, I would say a couple things. First, when we think about gender, women's is not quite 40%
10:00of our business. Last I checked, women's has a big play in the apparel market.
10:05My closet's a lot bigger than mine. Just saying. But so there's still, that should be at least half
10:11our business. So we're expecting tremendous growth there. I was just talking about head to toe. We
10:17always will be the leader in bottoms and denim bottoms, but tops. So in our business, we sell
10:24two bottoms to every top, which by the way, that used to be like five bottoms to every top. That
10:29should
10:29be the other way around. Minimally one-to-one. That is all white space for us. And then we have
10:34amazing growth ahead of us in expansion. You know, there's still room to grow in the US, but you think
10:39about these international markets. In some cases, we're just getting started there. So as we look
10:43ahead and say, how are we going to go from six point something to 10 billion, we can chart that
10:48out.
10:49We feel very confident.
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