LEVI - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Levi Strauss & Company Third Quarter Earnings Conference Call for this period ending August 29, 2021. All parties will be in listen-only mode until the question-and-answer session, at which time instructions will follow. This conference is being recorded and may not be reproduced in whole or in part without written permission from the company. A telephone replay will be available two hours after the completion of this call through October 13, 2021. Please use Conference ID 1570959. at is this over for webcast on company's also a internet, one call the of replay will website conference being the broadcast and quarter This levistrauss.com. be accessible turn I would Senior Shareholder & and Relations call Strauss to Management Levi Aida Director at the Risk Company. now Orphan, over to like

Aida Orphan

for for quarter of fiscal joining call Thank third on you today to our the us discuss the results XXXX.

our Strauss, CFO. are Chip Bergh, and and Joining Harmit on Levi Singh, today's call me CEO President of

the to these statements. Risk on available with Please today, particular everyone from We of our cause QX Section earnings our we to us factors differ. our on conference of that Form forward-looking uncertainties. risks for review the section to no complete our quarterly as assume be have be we on and and website release will filed statements. of also statements those webcast forward-looking link the results which of information our the site. today, that Factors our remind making report posted XX-Q could on filings SEC, results differ in could contemplated the involve found we in results We'd update Actual like financial to by on The our materially today's of are IR can that on call to any Also the obligation call that this note investors.levistrauss.com. forward-looking based this call, statements

in non-GAAP for be not release our substitute During to our Reconciliations are comparable financial financial to earnings measures. this a GAAP the on certain provided directly we These GAAP intended measures results. non-GAAP website. call, most measures IR are discuss will today's

one will entirety its for available our being call be of in on call this IR website call is on website scheduled our and Today's a replay shortly. this webcast Finally, is And the questions to hour, to time have to so others a addressed. one to now, to Chip. call turn yourself at the I'd give opportunity over please limit like their question

Chip Bergh

joining delivered multi-decade billion up of expectations. XX% a us were levels afternoon, versus with and high, Good exceeding profitability today. for XXXX, pre-pandemic strong quarter. our Revenues well QX, up at another thanks We XXXX, X% versus and QX everyone $X.X

casualization Our of over quarters clearly working is outpacing other and COVID, are by we’re And structural macro brand issues are impacts pressures. to category have of underscore now that the the including acceleration from results, accelerated apparel than we strategies the The trends our our row. been the this continues continuing for emerging started continued cycle growth with the pre-pandemic, despite improved few the total be than constraints larger and stay. denim stronger denim the ongoing the In is second past pre-pandemic apparel And the U.S., are both that all hot, growth. globally a inflationary chain here economics segment ever. the and drive in pandemic denim pandemic the to to Levi supply quarter and

in to given in the Impressive remains stores operated the to brick-and-mortar results returning both with were We're tourism and consumers markets reopen bounce reopened. impressive the to provide XXXX consumer levels. And quarter. our in versus despite reported We quarter as with in our in second growth, markedly we a back revenue, a our see remains demand pre-pandemic versus XXXX, doors traffic XXXX up stores XX% to excited the strong Europe QX, The down U.S. inflecting This, Europe. and company X% these basis. into multi-year drivers will business returning as business tailwind. of U.S. X% expect being up down to with on our saw accelerated region closed

approximately represented were channels stores year, follows and despite third revenues. XX% revenues growth quarter through digital year. total Importantly, last reopening XX% XX% up of prior This versus

side. doing job the outstanding the Our team logistics supply and challenges on mitigating unprecedented an is

with Our any XX% that our globally source combined diversified would strategy, one competitive more advantage. are long we from We of our sourcing not country. product scale a than of ago decided source

XX Our capacity, be global sourcing what's of We where did our currently currently exposure this concentrations is than on less going our spans countries. bottlenecks to avoid volume. in exposed to Vietnam, less production X% to like with

We key implemented products. also source strategy to cross a have

for For source. example, men's least are more for bottoms sometimes tops of different two source portion cross at production with XX% and approved current volume of also suppliers, more core. than our is countries, large A

quickly cross the including network, to chain sourcing us production. allows supply shift Our

of we the capacity X%. redirected our also leveraging of to the expertise goods the locked the remind and And digit an since and And I mid-single taken. costs We've to the quickly we've costs. next news, backups anticipating with in than offset costs X% are after first-half which summer our exposure of of East XXXX, through more volume As from low cotton majority less We're will And a we you we already scale, China in our the product West strong that will example, is come of approximately rapidly negotiated ocean very China through as of began inflation. implemented, our Coast intensify, vast second-half, single year. ports to most Coast at to tariffs very relationships the through in with control increase, have vendors recently, reduced U.S. ports. XX% our our protect and we much were actions for pricing digit we in

men's strong brand to demand was third products up and our stronger rise the versus assortments. markets categories up highlights top XXXX, and bottoms fits. five fashion iconic our half quarter. key QX saw in and some even returned X%. bottoms women's our to up Women's our Both The XXX sequential high bottoms all seeing men's versus businesses shift up towards continue, in QX, XXXX. now which women's strong Levi's The by X% X% increased XX% driven me fits XXXX. performance almost Men's outperformed bottoms versus like was looser up Let in representing trends acceleration. from We're XX%, growth and of for

wholesale Our X% by in grew strong U.S. performance driven channel versus primarily XXXX, global the

Our U.S. within the brand wholesale to working. are elevate efforts

AURs our are channel, up in momentum single in drove reopening premium business high regions. Our our XXXX. power, accelerated consumer underscoring year both significant pricing in Americas growth is the our and up the Europe to growth and versus prior XX% of stores digits, In direct over the

the our XX% was XXXX, up doors with closed strong of e-commerce. brand to to In global demonstrating being higher levels, XXXX versus up the store More assortments have by the conversion Europe. and are lower business in quarter, the strong X% are while driven Americas in growth brick-and-mortar and importantly, local revenues offset resonating our Levi's from U.S. in And Despite traffic. doors and tourist increases by our have with our growing, growth DTC power Europe, returned consumers. of not strength stores recovered, the pre-pandemic X% pricing driven yet in AUR

increase next our the to supporting some of show to results. These footprint U.S. fleet, of products gen our concept objective our profitable marketplace. Our encouraging in the in smaller continues mainline most distribution U.S. premium doors are

globally this most fleet We and are doors our which year, mainline of be open XXX to will elevate gen. new track are continuing to next on

continue consumers. also experience enhance We to our the channel for omni

on and quick a launched tailor app we quarter Americas. shop virtual introduced function in self-checkout began Two workshops, piloting the our store shop points. the During the final

authentic the a puts combination can First, retail that the LS&Co. a that meaningfully this business believe activewear joined and makes product, have Beyond team inclusivity, quality. is have completed international of roughly with we the acquisition and long-term. profitably impressive and category, in category Yoga XX high outstanding entire understanding, and and brand I'm Beyond is brand I acquisition also September. of capability premium late for stayed operations, and fast successful powerful and deep the Yoga with we me expertise men's proud innovators The and very in the the and us growing entrepreneurs scale brand building confident positivity, rooted our that their expertise, body consumer combination in with and margin diversity

report recently of it released you flag our two to to first we XXX the want report. standalone full, I I plus here. invite pieces in Finally, all page sustainability read but

efforts First, pillars on community. three our ESG main climate, we consumption, and centering are

ourselves our efforts. in objective Second, cadence is and our key of ambitious be reporting going plan annual report hold accountable to publicly an challenge to a We more ourselves even forward. to

Now of over details the to to the quarter. Harmit, share Harmit?

Harmit Singh

results Thanks, a Chip. everyone. We macro Good backdrop. delivered afternoon, challenging continued solid against

capital demonstrating our largest revenue adjusted margin all of and disciplined year's business last to have strategic share strength For the will that Sequentially, inorganic growth across incremental were The business sustainable margin the the business, and XXXX. to and expectations, COVID more our strength continue that strategy, shortly. of paying shareholders. cost brands, both the continue get growing acquisition, EBIT allocate of against and our in debt, importantly our business, revenue improved of profitability returning closing us outstanding of guidance to to our last as have but momentum stronger, quarter four, strong and relative by we execution three results initiatives. economics in confidence above year our the accretion These as and quarters. were quarter, reflected invest health of driven our quarter, to all impacted long-term in down areas believe both enabled performance exceeded of our XXXX, QX relative into gross cash digital across this our channels And management. over will I we the structural revised share this third The

revenues quarter. my chain chain constant to what currency one momentum described, unless third thanks expected. $XX our you revenue XX% otherwise. brand. results, of third XXXX, continued impact we I disruption up than revenues the were Adjusted the Chip currency third of held the As currency indicate of quarter commentary quarter $X.XX, to half Notably, roughly in I constant Compared just up of And only through business million of X%. and driven walk the will to by supply were the the less ahead quarter Levi's as EPS our we supply point, XXXX, improved the to reference or was limit comparisons, in in strength economics able diluted by structural the of

up by full consumer digital some represented stronger. versus mid-teens are quarter, share getting performance e-commerce and the details. operating remains in in and to metrics XX% price of Total than price XX% compared more on up and XXXX, company selling. me is our XXXX, AURs higher to Let ecosystem driven are Key conversion, sales the sales direct more QX channel increases color profitable.

compared to quarter a margin of number to and AI Relative of we XXX XXXX, a XX and Currency higher inventories tighter discipline. machine across despite consumer promotion sales air the mix, points the benefits Our management levels the learning. by basis to given margin reported third across resulting freight. gross channel, expansion expansion continued points. margin of was wholesale geographies, healthier gross of One-fourth a reflected better over of using cost which Adjusted XXX from EBIT basis margin not XXXX, a be level negligible. our and direct a potentially lower of from XX.X% sustainable expansion may higher have the were expanded high, women's, all record driven Three U.S. third lower adjusted the taken industry, adjusted up XX.X% price were of of long-term. EBIT promotions share the is and quarter margins and increases basis channels, from proportion points headwind highest of quarters sustainable, margin

we're expenses our managing continuing long-term invest opportunities. to strategically while in also SG&A, to Moving growth

to and $XX advertising, investments, of expenses About XXXX. million As DTC expected increase than higher the were due the was million impact currency. of higher QX, SG&A $XX

larger incentives will we I against for third million, few highlights X% now a reference against U.S. the XXXX. digit XX% Levi's regions, reflecting operated growth, from share in offering. the in of led accrued brand and network I’ll inflected Additionally, due our Andes Americas, was revenues strength up internal high wholesale. the comparisons The brand approximately net double up company e-commerce, performance our quarter $XX of three growth expectations. stores a grew value our the was company in and store part operated In Signature in region. of which The by our reflecting strength to to

remains continues have of as region with posting the Levi's that lifted, net are Europe pleased brand demand the revenue in the We lockdowns for strong with growth X%. momentum

digit. increased business and UK, reflects the Germany e-commerce consumer X%, company double direct XX%. our Our top stores collectively including reopened This region, across to which trends markets up as in and grew were France, the

impacted adversely virus Asia, the region XX% by to were revenues as Turning was resurgences down across markets.

being during to far nearly XXXX quarter, XX% below in remain region traffic addition closed of levels. In doors the the

we surge the the were sales in Delta to remain China's down While a in variant, confident of the due country. opportunity long-term significant

flows, of inventories the to X% Turning XXXX. and balance quarter were end at third cash sheet the below quarter

our remains of healthy, freight fresh prioritizing styles as into and carry Overall, with styles inventory of using are needed. our holiday right the We key and balance product air composition season. that future the over

year million, to as with incorporate and net Cash in we the was cash was year of the comparable free the of gear inventory Adjusted flow the liquidity overall remains mid-single the million the improvement up first at and billion. holiday for $XX Yoga. end negative nine $X.X $XXX of million $XXX period through months XXXX. strong the versus We digits expect Beyond and quarter up liquidity strong, end debt was and

discipline higher cycle, In XX% which our substantially was addition capital, working our reflected it and cash cash conversion to shorter is improved in XXXX. embraced as by have we than profitability,

our We These capital our both and returning across priorities. and allocation capital shareholders, are organic high growth capital deploying investments M&A. business, executing our include ROI all strategic inorganic to in

capital concentrate stores, in and our distribution We technology. new investments continue capacity to

for million. $XXX XXXX Our approximately expenditure is capital latest outlook in

have of our the back dividend levels, to repurchases. Board taken up for has million pre-pandemic $XXX approved We and share Director

is business, free After XXXX, in a strong in and The a geographies, last our acquisition runway accretive. acquisition million strong interest purchased Yoga, we growth to with million. us which categories, profitable over and expense. in save with for for $XXX again momentum of the brand our year, annual pre-pandemic note the approximately The in is quarter, will gross we Beyond $XX line expected distribution. EBIT an next via debt we completed expanded given down cash paid generate has Additionally, This remaining double that million and our $XXX consistent revenues is digit margin levels. flow X% due month

are the our different to in the fourth pandemic as the given quarter fourth we the demand strength the despite that will our parts we confident outlook, to for we quarter. sustain able turning business world, head Now our into surging of be consumer of momentum brands, in

increase XXXX, revenue to Note half to up to of than X%. XX%, last full XX% year we impact year more our to growth to seeing translates currency to of in prior benefit XXXX. growth We reflective reported incorporates September will quarter. expectation expect freight, But to similar us margin an only a XXXX, fourth Beyond Yoga. above this FX we quarter air X% expect this points Relative This reported revenue fourth represents QX, We saw to now margin gross This and XXX of XX%. basis guided trends will gross full guide. above is This that continue offset are the as quarter XX.X%. of accelerate be means XXXX. relative in also point, by is we and benefiting one be the addition around

’XX, and the QX be being primary expect adjusted advertising. $XX QX, SG&A drivers DTC than with will higher million We

expect QX QX, slightly basis it points We of higher revenues, XXXX. to but was than approach in X% nearly XXX only QX, above advertising

$X.XX mid-teens. we In fourth expect high to we higher year than year, than of the we XX%. terms margin second-half XXX quarter. profits, said least quarter, margin a approximately equates single of tax EBIT shared tax respect last of this basis in the last adjusted $X.XX. will to $X.XX XX%, increase an taxes, $X.XX XXXX, EPS above translate diluted quarter This deliver what the over $X.XX we more full full points the in And Compared us expect With yield adjusted of This fourth we which $X quarter around brings last of in EBIT what digits. to to growth to rate quarter. more expect rate adjusted than year full of for at to to XX%, fourth to $X.XX year’s and will

Q&A, Before go three thoughts. with key to leave to I'd you we like

delivering that higher We significantly expectations again our raising a year we from nearly full company. pandemic are ensuring our First, a profitability, XXXX, once anticipate the reaching year while exceeded stronger revenues emerge and we full outlook.

is broad leading. best which are our pricing attribute which momentum tailwind to cycle, we And AUR and demonstrated by from we based, our strength continued Our denim increases. brand the power

are Second, will the and benefits of enable pressures. our structural sustainable, us largely economics offset to inflationary

discretionary robust all returns across third, to continue dynamic, versus XXXX. capital We we invested making operate while And priorities, continue free more we're pandemic, propel investments cleaner get and stronger generating as to to through accelerate DTC. to ability the higher And flows. increase inventory, drive the capital margin with deployment our on Levi's we brand the and favorable cash

as now We growth. up the initiative continue I questions. are With our open future, extremely to balance that, profitable and our strategic we it optimistic sheet future leverage drive about to strong advance will for

Operator

[Operator Instructions] Matthew Our JP of first the line from question Boss comes from Morgan.

please? Your question

Matthew Boss

congrats quarter. Thanks, the Great. and on nice

So tied know in casualization? consolidation, feel basis. other with distribution. you are how category of then specific have a share just cited you do may to I relative expanding company how crisis, on wholesale I about particularly your do doing is on this a your brand Chip, guess, think TAM of changed And be guys the competitor category the well, you've and COVID, world market opportunity? versus much side you

to And I do think have opportunity continue take outlined perspective, from price robust retail you pricing power from a you've the a you believe here? pretty door expansion. to

Chip Bergh

Matt. good Yeah, question,

ago. quarters denim from fits say and new prepared talked definitely of we couple cycle, of that these And a casualization are declare to first which a the silhouettes confidently clearly, the quite would was cycle. trends, The looser I our benefiting denim driving now new the say benefiting I I the all, tailwinds, could new new we think think which we I remarks. in are of about First peers some are

a billion U.S., fact, in up higher just some was $XX.X category the nine In basis data, I got here pre-pandemic. jeans total that's it the is past in to month than

the nine during billion at was the period was same it way During month than and pandemic it $X.X billion. higher $XX.X

majority that's strategic people true execution is by and need as really, driven really of that's on that think going bouncing the are we've over I the our clearly, ability being probably of made, premiumizing are to to that's here by our quality So of wardrobes the is our AUR still strong, be fact category demonstrated largest and also the focused that majority we the highly are market take think gains with their particularly driven of refill price that the the we've brand But results driven to vast the But by that quarters, and growth brand, The forward. in we our everybody. and referred to. helping best far. couple going the I by past increases secure choices U.S.

distribution how is We we're gen have to premiumizing this today year, navigating all past low launching the which certainly we're in on also profitable clear, left And amount focused helped next with hardly lot are It's driving a supply gen economics of in challenging very stores looking of by that that promotion to very, helped as a terms on and committed, you growth. we're company to very of but we next U.S. here XXX have cash invest today thoughtful doors Harmit of total based and not well. that a navigate in chain this this, driving on alluded pandemic towards quarter that's has during our prepared results said the of in the giving in And us ammunition negligible but to guess then going a the significantly worked of has as much argue a committed really it's I U.S. and we're more a the the comments, structural improvement footprint, script, price, very have our would as which off the in to, environment healthier kind powder this These different pretty have us from I us with significant been we're new doing. wholesale be alluded which And premium we're quarter. working. and what standpoint. we've during good close P&L to foresight, which finally, to very, flow,

but month last, in billion us athletic into And we basis, we clearly bigger versus past tailwinds versus well. even on are up Yoga, category. the share got puts $XX us the a jeans month also think pandemic So, forget category. I've the mention, category, performance that's opportunity. five I pre-pandemic, Beyond And on U.S. that there's nine and on period. than those acquired And growth which as helping past times total the nine should the data a And basis, the don't

growth continue are navigate really, long we've opportunities, So, us I is And There's think we're to us. the as think every quarter, then and I tailwinds I think winning our to future help we bright. really going got going a that sure in place. can as at single to these come out thrown challenges

Matthew Boss

of luck. Best great color. That's

Chip Bergh

Thanks, Matt.

Operator

Thank you.

next BNP. the Exane comes Vasilescu Our Laurent line question from of from

Your question, please?

Laurent Vasilescu

Chip. good my for cotton. the hot prepared Thank Harmit. think you taking Chip, du much afternoon, Good mentioned in I question. obviously topic in jour very remarks is you've Oh, your afternoon,

come cotton? And today. know you're percentage of much FY can What runway is and and provide for talk really pricing in position we ‘XX the I FY anticipate back-half actually single still about on relative you But from should think of bubble for XXXX? in out your the I digits cotton business is anticipated digits to called for low your mid-single power think guidance further ’XX? Harmit, seen Can a last any there cotton up the you into explicit margin you XH ‘XX. think COGS your here? on gross I stronger

Harmit Singh

– Yeah, go first? want Chip, you to me let

Chip Bergh

asking, start are were I you thank place we very, than let in Yeah, Laurent, very a it's different question because a XXXX. we on, for in me think great

great let time. through XXXX, that different in of a me our of And paint that cotton In fact, market. of which we picture cost the our to I of midst work in September XX% me of gives remarks at But how But, cotton are, referred joined just confidence in the was goods. U.S. in a point so run company deal COGS, up total the our of increased ability it in kind I when we not prepared business total way, company, wholesale. XXXX, this low single was joined the in way cotton, digit by the was the to of the

business Our we're think picture. U.S. total quarter, XX% business, very, total XX%, company. different were our last I DTC. a We almost U.S. that's we very was the Today, of were then, XX% XX% DTC now back this

distribution very of more Europe. So overseas particularly got more margin, stronger a higher skews now, our we've International, different Much looking in brand, retail, footprint. business is gross which

a And is getting again the grown the take we leadership that was able and/or inflationary the the a different to I needed what very built our know dominant were we you difference. in terms I day Today, profits mean, think, back strength XXXX, take learning, in thing how worked going with even you meeting, over our a is we've getting back apply is got time machine pricing, you've we if tools that AURs up, very reason pricing. hadn't the it second the big XX-months, prayer the and/or to out going really in And I wholesale more XX-months goods days, these revenues data, power. last worse joined. a just And in said, we'll the then and pricing think the issues we pricing and And XXXX, he last capabilities business, brand the pricing to of Jim decade. night take we much that's than difference have culture, at our hold prayer center turnaround XXXX, been pressures over when Collins and and didn't and was don't strong this when clearly team. if very, we're into sticking. meeting into of that. decisions in be hitting model in situation, data think I have brand, we and support. over when We've cost strategic And of it's hard where priced I can The situation. gets But on weak, of we these more gross better and have months, talk to we very, So a very disciplined do big, to consumer. of inflation to some brand. the right same costs We're of figure got also over and seeing couple had come I In now, taken resonating analytics, last necessary. a early brand part pricing to anticipation of ahead margins much the some have cotton of on those have where that's us. the we of if as make incredible of incremental to still

bit a the So I’ll talk Harmit cotton let about little piece.

Harmit Singh

Yeah, sure. Thanks, Chip.

XX% prices two cost to not every on inflation bottoms. pant, ‘XX as seasons, wonderful of in X in on have the of driving we denim I'll we second, use about And of We about cotton for ratio. of cotton things. but so a one two cotton, the it's Chip question in our ‘XX, think X% answer do two pounds gross at to Just a just halves the locked margin numbers. buy to in one said, first-half

take, about it record To the it's gross margins quarters actions we'll question have we're sequentially, COGS. we inflation. couple have in referenced back we to mitigate can brand, given and strength the between land be improved. if think, able digit mid-single we ones and think the XX.X%, your taken last beautiful pricing about second-half, of the We we if impact the negotiating at of the And of Chip go The gross margins. speak. we that gross as first, process to of that And to on have the you isn't margins, only sustaining we,

what is go my five everybody's My if the Chip in what's less as strong that the is the experience leaner an if I right I happened this -- really with back said, have stronger. ours, asked, and well, inventories. I of the world that's mean, running they between environment you come banks script, it's the recession and view out that's economic team come will strong lot do difficult As you promotional, thing. of Matt, hardships, like probably because in we brands of couple

increases, that's So our the as gross all think use margin fourth here of to product, more margin have to our XXX We'll And price by diversification, About is et about basis cetera. accretion, three-fourth environment all you international, I'd points, it stay. AI, promotional, more and structural out. about accretion, figure the say, driven becomes the potentially, et cetera. premiumizing if of a

have basis some QX, to think I intend to for takes XX points, over reflected air guidance is in And the the years. on XXXX good history margin future. our in a the put I'd we I grow about question for It's gross successfully reflected we gross I say, predictor in think margin. continue of And what QX. grown I is I margin, right margin. is headwind the freight. is gross mean, now have appropriate guidance gross mean, your about

meet lot things has to meet we working is view that. is have margin I of us things to we our air will And if us. economically that, against air for consumer think, working and to Our intent freight freight, few But gross a a demand.

on in when QX, XXXX out probably So earnings we come February. better for early give January, late I'd sometime a year with the say perspective we’d

Laurent Vasilescu

much Thank the all for you very color.

Operator

Thank you.

the from of next Omar Evercore. Our Saad comes question from line

question, Your please?

Omar Saad

get you’re it's chance bear as a which rejuvenate brand. that to already But Levi's marketing? Yoga, a core first and of a one in this quarter. you to kind it kind call. for that Is question. it small afternoon, a going the key large turn transaction, stage to wanted and maybe about follow-up ask brand, albeit taking Yoga? my to and on obviously I could was the how little Great you to Beyond the the public job of it to and conference And Beyond okay. the elements talk recognized small with you about relative hypergrowth It's are if Is around situation Good Levi's, thanks bring monetized. built bit apply? have we about Levi But have in early ask your you've on you that’s it's more you international? how And under from platform What experience I widely

Chip Bergh

consumer on at launching touched years you brands, is brands, brands, built body, the to end XX% profitable part over is we and kind really thesis work that XX digit that, the bit of mean, should brand about I inclusion could for what was and in of building and an I guy. they've pretty it's This Yoga bring when the turn be bring I they've working double of this a the out deep the my was I product see last brand and and great we brand Yeah, I Levi's, woman we And feel if And And I'll has at insight. one would that things product really new consumer amazing great and Okay. fundamentally we've that impressed I good most I they the celebrates the And brands. what the combined And deep party, can part the business insight, is coming done. consumer – it whole legs. this Beyond I insight, so a of that me, capabilities has is much there about website, the with a community they fashioned acquisitions, their athlete, think with mean, think think, say it. is looking way. company bear. they of consumer it of out remarks, a And, any about deep insight and I could it brand about the the I elaborate been XX-years an you what opportunity. understanding just a Levi’s at really that creating I of a thing mean, That's to to is fundamental I can is kind on end But little day P&G, us it party a brand, knowledge. on day, And users, that body scale category were and this the the around, done first bring and by building built in grown her look and of when that know is guess brand mean, is, way, company regardless to but at positivity, body resonates prepared real and a the understanding kind it. But the the fact the it you'll at the existence. we around team entire and this, of her that a I'm not when turnaround turnaround is the of we What joined consumers. that joined this last spent their did of the managed of and diversity. reason know was old we've around. the well, of and turn maybe ability and a was shape. the

As it they into business. they money, poured made growing back the

of so brand. is building capabilities, an at number clear a given retail this we help this bring deep a be and our deep to capability, total retail is whitespace a because what three the Number also bear opportunity is capital time. which But opportunity two, brand will one. understanding this men's, to clearly is for is then the And them. way business Number travel it we're almost business. business, finally, that not can But this a of we're economics brand here to bit to it's going there. go all almost And learn internationally, out structural online, wholesale this a in a is It's of most really U.S., brainer. a of no right little going now its our fast,

things able I digit this we it think combined of our do to what trajectory, to time, capabilities growth continue double business. their meaningful to me very, so a that with be and confidence going the it's And is going that together, capabilities drive to business, think be gives And over contributor all we're those very profitably.

Omar Saad

Got color, great Chip. it. That’s

Harmit Singh

if we’ve got increased thing you Omar, we increased but the capital, we've returns. at history since last also decade, in the only here I’d only add, not look

think scale on about cultural And acquisition, the approved capital so board as three disciplined any this or filter I important and our strategic you a and filter. the think, with acquisition as filters, this we the financial based as allocators, if filter is

can scale we we this really on So, think big. the and are hook and to be grow

Omar Saad

you Got to the mean LS&Co Harmit, to said XX%? to when you it. then margin, guys going above which I accretive be to accretive clarify, You And said current already margins, you just think is that? over

Harmit Singh

Yes.

Omar Saad

luck. Great. Good color. for Thanks, the guys, all

Harmit Singh

Omar. Thanks,

Operator

Thank you.

line Our comes Greenberger next Stanley. the of from Morgan question from Kimberly

Your question, please?

Kimberly Greenberger

Americas to very Thank that the high so noticing about where compared you growth XXXX single growth much. in Great. Europe, talked nice I'm you obviously rate. and digit

one And very supply It's back I business think I inventory, And to talk that step. store from together the is get closures. in the things step you all very, it the evident to to this see earnings the is recovery and assuming from you open path that's that of to I back numbers and first geography. very chain operational to a here best think which right think normal key what ought down numbers chain that suspect is XXXX. wondering supply I going challenges sort around to suffering managed and the X% the some suspect are that to was if life season. that inventory. come maybe separately Asia, I need we're just on get sort then, through through But of stores could let's about I'm where looking am well, that be? the you've I of to first if to the as at going be

you in what think sort territory? number into get to back I aspirations get Do able that And when have of be you there what to positive of any it you know so through way that we're sailing would any to that shape. good sort because of be better all into supply do of So quite you see like, a just inventory color line territory. So hearing looks But have inventory as are -- the you sight helpful? is positive the from others? experiencing in Thanks chain you're you'll looks like challenges much. than you're delays

Harmit Singh

Sure, Kimberly. you question. for Thank your

be countries the Asia. the continue driven performance were is largely in to forms, in around Asia’s different lockdowns that fact different quarter lockdowns, and there by in

if of little the if our a during think And think closed you about as our were you we at during store XX%, revenues quarter, higher you the driven base So base store I'd think so bit down up world, the look of the say, XX% as of had quarter. I eastern it's about over by essentially of traffic world, part the but vaccination And, the lockdowns. western the part softness, scaling we rates, time. world, the

dragged numbers. numbers softer was So India a that's what's COVID through really Q. the driving In it tough that largely QX, resurgence in the of that went

September business QX, what but bouncing quarter, our saw. QX. the just nowhere you less down and seeing back, still, month slightly is we're because closing QX the is we're And, September, is – near but we talked probably to is, it view As haven't of XX% think than definitely be that flat the was will we about the first down,

on round just we the it's opportunity. a China the we smaller that's quarter Asia, bit is the consumers much Asia then China and Asia, four, the color in clearly just a the business bounces with recent And of given so before know of lockdowns. momentum the down back our pursuing piece opportunity brand, of an largest just we've and Now, of number XX%, you driven little think XX%, the but in China. probably represents a we starting was as by so continue it's quarter, strength And, lockdowns. that are in seen essentially do of

to on the relative on perspective inventory, of question in down you're quarter end Inventory is X% Asia. that's ’XX your To So our right. three.

should X% our be expectation holiday NRF about grow up season. just will that you is And what's what holiday. for that, growth that probably like and be others that the in for positive. year. us referenced November, view inventory that's we're to up quarter we inventory gearing is But in fiscal driven like our relative consumer ends so inventory, by the We the by holiday will believe, up, of is It the fact that we're is driving last gearing growth have up don't. meet strong probably December. up said really X% the expectation December, Brands to will for for demand, X%, not gear four essentially, so Our fact our

in numbers and The appointed other our Beyond piece not Yoga to. that is is is

principle, demand, at the So that two for inventory the those the what's of pieces and driven mean, the I really, ways. have inventory. really what’s overall health two year call. the to But drive good. largely and we levels One in growth or And are inventory. at the a the okay, but inventory inventory health is continues look look be we the that's expected of large I the importantly, by that fact And

Kimberly Greenberger

so Terrific Thanks color. much.

Harmit Singh

Thanks, Kimberly.

Operator

you. Thank

Our Securities. from Guggenheim next question comes from the line Bob of Drbul

please? question, Your

Bob Drbul

Good afternoon, guys. Two questions I if could. actually,

your for any of price like, recently? locked is just to about Have helpful. one been but talked cotton benefits little move a the discussions ability had, the a contracts? how when margin. the suppliers second the guess that the on seen sort before there the break bit that And contracts anything is room The your question I do guess wiggle have have -- how you've along That tight in? we've about you increases or you Their What margin back about given the we those to I also on of first the lines. the sort much gross would you've the one go like, second. think to be is, my then benefits to are top-line,

you top-line? the the in taken, really bit for that more have but buckets the of the margin with the increases expectation, wondering maybe if that also Thanks. price share gross how pricing, like little help Just you much you on terms a does could

Harmit Singh

Yeah.

or contracts our honor things us we when think tough. a benefit can for been And are against that and tough, us, relationship is have a own that with things long they're it. have One, But large wonderful helps time. tough. have I that the is tight. be core and we the fact They in a Bob, very, we to very suppliers when a pretty here work just are are really us or So going example, FX, thing are manufacturer, partners bit cultivated of of for for core, a things. couple The years. things

there So you long, And longer-term. this start demand long time. or orders being a those placing about thinking our about for manufacturers vendors can think can

helps that bring think I the to as well both sides, what volume can of we as table. the

be the answer And so to that I would first would say, your about. question

about that The obviously market our second, teams on are job, this. which is, a to what because we don't They I leadership can benchmark flex we And we pricing hurt lot we demand. the doing we how in muscle it? think, through areas, taking are phenomenal thinking our in ground are and competitors. do a ensure of consumer position a

is you different when resonating styles we've good parts strong silhouettes for and opportunity proactive doing it a consumers learning. because I back as been you pricing have that when bunch do say pricing The the we're it's – you you it, with long-term test And and the we the think feel don't whole machine different beginning take stores, it, huge that and that pricing. Chip then need of to need to a of and can brand And always with. world a of of other important unlock, like the reasons. on given and referenced is thing we've the been on use pricing and AI fact it to I take we And pricing. in for is

we whether to with of our And the U.S., took bucks. pricing we there, last it's precision, taken into during here the have generally XX wholesale it's women for example, that or X% that X%. quarter in up X% and say pandemic, But three on difficult style sold was in year, stuck. So it

and is bit help going I longer-term build the more a bit science, there's of think And really a to a and the odd of use AI machine is learning, process. in what discipline lot us so but of

Bob Drbul

you. Thank

Operator

Thank you.

the Fargo. from from comes question next Our line Wells of Boruchow Ike

please? question, Your

Ike Boruchow

afternoon, everyone. Hey, good

question. not So, who's to Harmit, this I’m Chip or sure answer best

distribution you can also future plan that when and seeing onto trying just already for digit that low year? freight predicated of strategies to And you've elevated early you're the inflation kind Or today you're that next implement to retail of follow-up, that XH, single is pass second of wholesale? partners mid-single implemented? you Or, to you the in yourself it the you So price say Thanks. QX, digit offset next at from you any confident on kind are and initiatives then year's pressure are AUR trying hit XH is your and taking out? pressure that in

Harmit Singh

Yeah. the question. Thank you asking for

as it's it. air more our part with We whole our the haven't happening things are relationship It's pool, a because passed are about costs other mean, of And, reacting think profit wonderful we I our and meet we to consumer to freight to retailers, demands. freight air our on retailers, just important there's and it.

right at we taken So The, we've pricing actions, that's referred the about that shareholders we we're ensure go stakeholders. least question job how things. I ensuring good well and the is now. mid-single up thinking your to, so to the our and drive is, I sharpen profitability about we market second feel And to now. and the pricing. as on what we'll obviously is in cost to, we answer and to that it, the six and Matt the digits We addressable other obviously, were wonderful, are inflation first-half the off second for about is contemplating taken then One feel that our ago. demand good mean, consumer tougher, inflation pricing Chip get would initiatives. profitability, say things XX-months to -- pencil second-half. If two in That's to as growing the and balance actions offsetting

Ike Boruchow

Thank you.

Operator

you. Thank

Our of Citi. the Lejuez Paul from next question line comes from

please? question, Your

Paul Lejuez

we where up, partners are order an you're Curious wholesale color prices Hey, guys, about chain delays thinking an provide of much ordering thanks. called can to you than you taking In books about helpful? second, price. any a so guys there's environment from $XX your If unit that we're And how first-half you talking Thanks. the XQ then more impact, out How XQ? do going as in supply just million units? on be have units? you expect for think could about perspective

Harmit Singh

could and Chip take on. second jump I feel the to piece free

I clear. probably four. as three, not $XX not to in in I service referenced think to that quarter We million have it, were the but increase do So, been expect we quarter may I able

So better we But accelerates. more the there inventory demand. news is, The probably is if sell is had good our and growth product, more news could faster more. we

to think I that meet supply inventory, building to it's all chain key in and Chip we're able manage of that lot I a constraints balance think referred between ensuring demand. the a

So it. that our best to can. best as we're But I think demand there as there, through out is and doing address we managing we're

‘XX. up sales think I and to Paul book look at you volumes I But think we was your are our book question, demand volumes. and slightly about if down, relative second Volumes year-over-year, mentioned, are down was X%.

haven't and publicly order the have first-half, the But about but where publicly volume. really area that the P book, in about think we we think difference about up, books, talked really about is Europe. I is talked book the we what say as book we P the we As P volume. haven't can

similar the think I we've it seen follows far. trends that so

over and time. time, over market has think predict this to I Difficult relative grow volume the to that's accelerate what because to ’XX. I'd increased when, but will think tend also at time, addressable say, I

Paul Lejuez

luck. you. Good Thank Okay.

Harmit Singh

Thanks.

Operator

you. Thank

is UBS. Jay comes final for today, question of Our the our from next line from question Sole

please? Your question,

Jay Sole

Yoga some Great. a core that components help comes acquisition is the that of can insights bottoms the sort of bring how you Yoga the business. talked Is This into that give of I'm potential Beyond you can Chip, brand in it with aspect Yoga company the opposite possible outside could lifestyle maybe of of is you tops an it the Thank women's so something help its grow question much. Beyond some of to outerwear there women's assortment when is the past, earlier you do? that Beyond the can business into it the that grow going that, to You of potential will possibly Levi's your that skills business? ask the and question. being about

Chip Bergh

for Yeah, fact, kind you piling mean, in of on. thank I

beyond I And focusing of able core doing, time. But, by really over business. the lot meeting to the puts the to total help key some total there. our to delivering strategically company. is going doing one one said, those a size of ambition our think to tiny us continue clearly women's of get our think diversify did is, market going I help so company. strategic This we to they think this of this One is XX% we again, long-term. it be has much just And really brand, on that's And and the capabilities business pillars reasons we're satisfying of take diversify a bring will do scrappy a think Yoga, little of consumer that learnings to it's back potential of demonstrated Beyond business lot. if is mean, And our the is you further is us are protect But to product. great business. skills to that I what and this into the to I team, they're big this things that I you it has to and just a our to will, strategic by an I bigger one will. build reasons we very us organically, help denim than that trying ability for will mean, if

we and business over in of that see So business, I some of fabrics more halo and of think on hope our skills that will that do performance-oriented the they we company. this the help very its could fabrication but on it time that's accreted, the capabilities be that. about the us can rest bring own, rest should the that over And my it really beyond learn

Jay Sole

you so much. Thank it. Got

Chip Bergh

follow-up we've on we'll there so sure get questions But And thank to want make Yeah. didn't you I calls. But you burning, answering that we'll that have for a can to I with through here. just calls, question line. get But, Thanks send joining it the we the that if follow-up do of thank call got in lot, punchier Aida, are we it to I left quickly. questions have that up a the calls to the couple on still we of answered, and everybody. be us. turned around all get I a that's all everybody wrap to couple And, in know a questions real our We guys. of know and get guess, everybody.

our Our point also soon. of much, of a them, you I very have big you and talking we'll go provide next really joining call out thank safe and and isn't put under everybody the has for Levi's talk fiscal all and And you we way, a again and holiday hope buy you us. until that lots them to the in guidance happy ahead of all tree. Thank be we'll for year announcement. to January, we'll in when and ‘XX. full QX since end won't time, at And But,

Operator

ladies the conference. This today's Thank your you, and participation conclude in gentlemen, for program. does

disconnect. You Good may now day.

Levi Strauss & Co. (LEVI) 7 Oct 212021 Q3 Earnings call transcript