LEVI STRAUSS & CO

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report and with our audited financial statements and related notes in our Annual Report on Form 10-K for the year ended November 26, 2023, filed with the Securities and Exchange Commission on January 25, 2024. Some of the information contained in this discussion and analysis in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements. We use a 52- or 53-week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. References to 2023 and 2024 below in this section are references to our fiscal years ending in November 2023 and December 2024, respectively. See “Financial Information Presentation.”

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report and with our audited financial statements and related notes in our Annual Report on Form 10-K for the year ended December 1, 2024, filed with the Securities and Exchange Commission on January 29, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements. We use a 52- or 53-week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. References to 2024 and 2025 below in this section are references to our fiscal years ending in December 2024 and November 2025, respectively, unless otherwise indicated. See “Financial Information Presentation - Fiscal Year.”

Previous wording

We are an iconic American company with a rich history of profitable growth, quality, innovation and corporate citizenship. Our story began in San Francisco, California, in 1853 as a wholesale dry goods business. We created the first riveted blue jean 20 years later. Today, we design, market and sell products that include jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets, footwear and related accessories for men, women and children around the world under our Levi’s®, Dockers®, Levi Strauss Signature™, Denizen® and Beyond Yoga®brands. We service consumers through our global infrastructure, developing, sourcing and marketing our products around the world.

Current wording

We are an iconic American company with a rich history of profitable growth, quality, innovation and corporate citizenship. Our story began in San Francisco, California, in 1853 as a wholesale dry goods business. We created the first riveted blue jean 20 years later. Today we design, market and sell products that include jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets and related accessories for men, women and children around the world under our Levi’s®, Dockers®, Levi Strauss Signature™, Denizen® and Beyond Yoga®brands. We service our consumers through our global infrastructure which develops, sources and markets our products around the world. In the first quarter of 2024 we announced the strategic decision to discontinue the Denizen® brand with operations winding down during fiscal year 2024 and into 2025. The wind down of Denizen® brand operations was substantially complete at March 2, 2025. In the fourth quarter of 2024, we announced we were undertaking an evaluation of strategic alternatives to the global Dockers® business, including a sale or other strategic transactions. As discussed in the Project Fuel section in this Management’s Discussion and Analysis, the Dockers® business was held for sale at the end of the first quarter of 2025 and reported as discontinued operations in the consolidated statements of operations for all periods presented. The current year and prior year metrics below exclude the impact of Dockers®.

Previous wording

We recognize wholesale revenue from sales of our products through third-party retailers such as department stores, specialty retailers, third-party e-commerce sites and franchise locations dedicated to our brands. We also sell our products directly to consumers ("direct-to-consumer" or "DTC") through a variety of formats, including our own company-operated mainline and outlet stores, company-operated e-commerce sites and select shop-in-shops that we operate within department stores and other third-party retail locations. As of August 25, 2024, our products were sold in over 45,000 retail locations in more than 110 countries, including approximately 3,400 brand-dedicated stores and shop-in-shops. As of August 25, 2024, we had 1,243 company-operated stores located in 39 countries and approximately 600 company-operated shop-in-shops. The remainder of our brand-dedicated stores and shop-in-shops were operated by franchisees and other partners.

Current wording

We recognize wholesale revenue from sales of our products through third-party retailers such as department stores, specialty retailers, third-party e-commerce sites and franchise locations dedicated to our brands. We also sell our products directly to consumers (“DTC”) through a variety of formats, including our own company-operated mainline and outlet stores, company-operated e-commerce sites and select shop-in-shops that we operate within department stores and other third-party retail locations. As of March 2, 2025, our products were sold in approximately 50,000 retail locations in approximately 120 countries, including approximately 3,200 brand-dedicated stores and shop-in-shops. As of March 2, 2025, we had 1,169 company-operated stores located in 39 countries and approximately 510 company-operated shop-in-shops. The remainder of our brand-dedicated stores and shop-in-shops were operated by franchisees and other partners.

Previous wording

Across all of our brands, pants – including jeans, casual pants, dress pants, shorts, skirts and activewear – represented 66% and 67% of our total units sold in the first nine months of 2024 and 2023, respectively. Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 28% and 27% of our total units sold in the first nine months of 2024 and 2023, respectively. The remainder of our products are footwear and accessories. Men’s products generated 62% and 64% of our net revenues in the first nine months of 2024 and 2023. Women’s products generated 36% and 35% of our net revenues in the first nine months of 2024 and 2023, respectively. The remainder of our products are non-gendered. Products other than denim bottoms – which include tops, pants excluding jeans, accessories and footwear – represented 41% and 40% of our net revenues in the first nine months of 2024 and 2023, respectively.

Current wording

Across all of our brands, pants – including jeans, casual pants, dress pants, shorts, skirts and activewear – represented 69% and 66% of our total units sold in the first three months of 2025 and 2024, respectively. Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 28% and 27% of our total units sold in the first three months of 2025 and 2024, respectively. The remainder of our products are footwear and accessories. Men’s products generated 61% and 62% of our net revenues in the first three months of 2025 and 2024, respectively. Women’s products generated 38% and 37% of our net revenues in the first three months of 2025 and 2024, respectively. The remainder of our products are non-gendered. Products other than denim bottoms – which include tops, footwear and accessories and pants excluding jeans – represented 35% of our net revenues in the first three months of both 2025 and 2024.

Previous wording

Our Europe and Asia businesses, collectively, contributed 44% of our net revenues in the first nine months of both 2024 and 2023. Net revenues from our international business, which includes our Europe and Asia segments, as well as Canada and Latin America from our Americas segment, was 58% in the first nine months of both 2024 and 2023. Sales of Levi’s® brand products represented 89% and 87% of our total net sales in the first nine months of 2024 and 2023, respectively.

Current wording

Our Europe and Asia businesses, collectively, contributed 46% and 48% of our net revenues in the first three months of 2025 and 2024, respectively. Net revenues from our international business, which includes our Europe and Asia segments, as well as Canada and Latin America from our Americas segment, represented 57% and 59% of our net revenues in the first three months of 2025 and 2024, respectively. Sales of Levi’s® brand products represented approximately 94% of our net revenues in the first three months of both 2025 and 2024.

Previous wording

Our wholesale channel generated 54% and 57% of our net revenues in the first nine months of 2024 and 2023, respectively. Sales to franchise partners, included as a component of our wholesale channel, generated 6% of our net revenues in the first nine months of both 2024 and 2023. Our DTC channel generated 46% and 43% of our net revenues in the first nine months of 2024 and 2023, respectively, with sales through our company operated e-commerce sites representing 21% and 20% of DTC channel net revenues in the first nine months of 2024 and 2023, respectively, and 10% and 8% of total net revenues in the first nine months of 2024 and 2023, respectively.

Current wording

Our wholesale channel generated 48% and 51% of our net revenues in the first three months of 2025 and 2024, respectively. Sales to franchise partners, included as a component of our wholesale channel, generated 7% of our net revenues in the first three months of both 2025 and 2024. Our DTC channel generated 52% and 49% of our net revenues in the first three months of 2025 and 2024, respectively, with our company operated e-commerce business representing 24% and 23% of DTC channel net revenues in the first three months of 2025 and 2024, respectively, and 12% and 11% of total net revenues in the first three months of 2025 and 2024, respectively.

Previous wording

In the first quarter of 2024, our Board of Directors (the "Board") approved a multi-year global productivity initiative, “Project Fuel”, designed to accelerate the execution of our Brand Led and DTC First strategies while fueling long-term profitable growth. This will be a two-year initiative beginning in 2024, with a focus on optimizing our operating model and structure, redesigning business processes and identifying opportunities to reduce costs and simplify processes across our organization.

Current wording

In the first quarter of 2024, our Board of Directors (the "Board") approved a multi-year global productivity initiative, “Project Fuel”, designed to accelerate the execution of our Brand Led and DTC First strategies while fueling long-term profitable growth. This will be a two-year initiative beginning in 2024, with a focus on optimizing our operating model and structure, redesigning business processes and identifying opportunities to reduce costs and simplify processes across our organization. The first phase of the global productivity initiative was completed primarily in the first half of 2024.

Previous wording

The first phase of the global productivity initiative was completed primarily in the first half of 2024, resulting in the Company recognizing $174.7 million in restructuring charges for the nine-month period ended August 25, 2024, primarily due to severance and other post-employment benefits, recorded within “Restructuring charges, net” in the accompanying consolidated statements of income. The Company is changing its distribution strategy from an owned and operated model to a mix of owned and third-party operated distribution centers, which will result in the sale, lease or transfer of certain distribution centers currently owned and operated by the Company to third-party logistics providers. During the nine-month period ended August 25, 2024, we also recognized $34.3 million of restructuring related charges primarily consisting of consulting fees and an impairment charge of $11.1 million related to capitalized internal-use software as a result of the decision to discontinue certain technology projects in connection with Project Fuel, recorded within Selling, general, and administrative expenses (“SG&A”) in the Company’s consolidated statements of income, and $5.5 million in goodwill impairment charges related to our footwear business as a result of the decision to discontinue the category recorded within Goodwill and other intangible impairment charges in the Company’s consolidated statements of income. We may incur additional significant restructuring charges as we progress our global productivity initiative, which could be material in a future fiscal quarter or year.

Current wording

The Company is changing its distribution strategy from an owned and operated model to a mix of owned and third-party operated distribution centers, which has resulted and will continue to result in the sale, lease or transfer of certain distribution centers currently owned and operated by the Company to third-party logistics providers. We incurred additional restructuring charges of $6.7 million and restructuring related charges of $3.1 million in the first quarter of 2025, which were included in “Restructuring charges, net” and “Selling, general and administrative expenses” (“SG&A”), respectively, in the consolidated statements of operations and we may incur additional significant restructuring and restructuring related charges as we progress our global productivity initiative, which could be material in a future fiscal quarter or year.

Previous wording

•Inflation and other macroeconomic pressures in the U.S. and the global economy such as rising interest rates, energy prices and recession fears are creating a complex and challenging retail environment for us and our customers as consumers reduce discretionary spending. A decline in consumer spending has had and may continue to have an adverse effect on our revenues, operating margins and net income. Challenges forecasting consumer demand has in the past and may in the future lead to elevated inventory levels both with us and our customers, resulting in fewer full-priced sales and a more promotional environment. These trends historically have impacted and may impact our future financial results, affecting inventory, revenue, operating margins and net income.

Current wording

•Inflation and other macroeconomic pressures in the U.S. and the global economy such as energy prices, potential new tariffs and recession fears are creating a complex and challenging retail environment for us and our customers as consumers reduce discretionary spending. A decline in consumer spending has had and may continue to have an adverse effect on our revenues, operating margins and net income (loss). These trends historically have impacted and may impact our future financial results, affecting revenue, operating margins and net income (loss).

Previous wording

•The diversification of our business model across geographies, channels, brands and categories affects our gross margin. For example, if our sales in higher gross margin geographies, channels, brands and categories grow at a faster rate than in our lower gross margin business geographies, channels, brands and categories, we would expect a favorable impact to aggregate gross margin over time. Gross margin in our Europe segment is generally higher than in our Americas and Asia segments. Value brands, which are focused on the value-conscious consumer, generally generate lower gross margin. DTC sales generally have higher gross margins than sales through third parties, although DTC sales also typically have higher selling expenses and could have lower profitability. As we continue to execute on our strategic framework to be DTC first, we expect to see greater impact on our gross margins. Enhancements to our existing product offerings, or our expansion into new brands and products categories, may also impact our future gross margin.

Current wording

•The diversification of our business model across geographies, channels, brands, and categories affects our gross margin. For example, if our sales in higher gross margin geographies, channels, brands and categories grow at a faster rate than in our lower gross margin geographies, channels, brands and categories, we would expect a favorable impact to aggregate gross margin over time. Gross margin in our Europe segment is generally higher than in our Americas and Asia segments. DTC sales generally have higher gross margins than sales through third parties, although DTC sales also typically have higher selling expenses and could have lower profitability. As we continue to execute on our strategic framework to be DTC First, we expect to see greater impact on our margins. Enhancements to our existing product offerings, or our expansion into new brands and products categories, may also impact our future gross margin.

Previous wording

•Foreign currencies continue to be volatile. Significant fluctuations of the U.S. Dollar against various foreign currencies, including the Euro and Mexican Peso, may negatively impact our financial results, revenue, operating margins and net income.

Current wording

•Foreign currencies continue to be volatile, with the volatility increasing due to the imposition of and changing policies around tariffs. Significant fluctuations of the U.S. Dollar against various foreign currencies, including the Euro and Mexican Peso, has in the past and may in the future negatively impact our financial results, revenue, operating margins and net income (loss).

Previous wording

•The current domestic and international political environment, including volatile trade relations, the Russia-Ukraine war, the Israel-Hamas war and the related disruption to shipping lanes and civil unrest taking place in certain parts of the world have resulted in uncertainty surrounding the future state of the global economy. There is greater uncertainty with respect to potential changes in trade regulations, sanctions and export controls, which also increase volatility in the global economy. This environment has affected and may continue to affect production and distribution lead times, increasing our costs and potentially affecting our ability to meet customer demand. If these disruptions persist, they may require us to modify our current sourcing practices, which may impact our product costs, and, if not mitigated, could have a material adverse effect on our business and results of operations.

Current wording

•The current domestic and international political environment, including volatile trade relations and military and civil conflicts, have resulted in uncertainty surrounding the future state of the global economy. There is greater uncertainty with respect to potential changes in trade regulations, tariffs, sanctions and export controls which also increase volatility in the global economy. This environment has affected and may continue to affect production and distribution lead times, increasing our costs and potentially affecting our ability to meet customer demand. If these disruptions persist, they may require us to modify our current sourcing practices, which may impact our product costs, and, if not mitigated, could have a material adverse effect on our business and results of operations.

Previous wording

•The Organization for Economic Cooperation and Development reached agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals. We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of these legislative changes could have an adverse impact on our effective tax rate, tax liabilities and cash tax. Given the numerous proposed tax law changes and the uncertainty regarding such proposed legislative changes, the impact of Pillar Two cannot be determined at this time.

Current wording

•The Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework. While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes are not expected to have a material impact in fiscal year 2025 but could have an adverse impact on our effective tax rate, tax liabilities, and cash tax in future years.

Previous wording

•There has been increased focus from our stakeholders, including consumers, employees and investors and regulatory organizations on corporate environmental, social and governance (“ESG”) practices, including corporate practices related to the causes and impacts of climate change and corporate statements, practices or products related to a variety of social issues. We expect that stakeholder expectations and actions with respect to ESG practices and social issues and regulatory requirements will continue to evolve rapidly, which may negatively impact our financial results, and which may necessitate additional resources to monitor, report on, and adjust our operations.

Current wording

•There has been increased focus from our stakeholders, including consumers, employees, investors, regulatory organizations and legislatures on corporate environmental, social, and governance (“ESG”) practices, including corporate practices related to the causes and impacts of climate change and corporate statements, practices or products related to a variety of social issues. We expect that stakeholder expectations and actions with respect to ESG practices and social issues and regulatory requirements will continue to evolve rapidly, which may impact our reputation and financial results.

Previous wording

We typically achieve our largest quarterly revenues in the fourth quarter. In fiscal year 2023, our net revenues in the first, second, third and fourth quarters represented 27%, 22%, 24% and 27%, respectively, of our total net revenues for the year.

Current wording

We typically achieve our largest quarterly revenues in the fourth quarter. In fiscal year 2024, our net revenues in the first, second, third and fourth quarters represented 24%, 23%, 24% and 29%, respectively, of our total net revenues for the year.

Previous wording

•Adjusted EBIT. Compared to the third quarter of 2023, Adjusted EBIT increased 27.3% to $175.4 million from $137.8 million. The increase is due to higher gross profit described above, partially offset by higher Adjusted SG&A expenses in the current year. As a result, Adjusted EBIT margin was 11.6%, 250 basis points higher than the third quarter of 2023 on a reported basis, and 260 basis points higher on a constant-currency basis.

Current wording

•Adjusted EBIT. Compared to the first quarter of 2024, Adjusted EBIT increased 47.2% to $204.0 million from $138.6 million. The increase is due to higher gross profit described above and lower Adjusted SG&A expenses as a percentage of net revenues. As a result, Adjusted EBIT margin was 13.4%, 400 basis points higher than the first quarter of 2024 on a reported basis, and 440 basis points higher on a constant-currency basis.

Previous wording

•Adjusted net income. Compared to the third quarter of 2023, Adjusted net income increased to $131.9 million from $112.0 million. The increase is due to higher Adjusted EBIT as described above.

Current wording

•Adjusted net income. Compared to the first quarter of 2024, Adjusted net income increased to $150.0 million from $100.4 million. The increase is due to higher Adjusted EBIT as described above.

Previous wording

•Diluted earnings per share. We recognized diluted earnings per share of $0.05, compared to $0.02 in the third quarter of 2023. Currency translation did not have a significant impact on diluted earnings per share.

Current wording

•Diluted earnings (loss) per share from continuing operations. We recognized diluted earnings per share from continuing operations of $0.35, compared diluted loss per share from continuing operations of $0.03 in the first quarter of 2024. Currency translation did not have a significant impact on diluted earnings per share.

Previous wording

•Adjusted diluted earnings per share. Compared to the third quarter of 2023, Adjusted diluted earnings per share increased to $0.33 from $0.28, mainly due to the higher Adjusted net income described above. Currency translation did not have a significant impact on Adjusted diluted earnings per share.

Current wording

•Adjusted diluted earnings per share. Compared to the first quarter of 2024, Adjusted diluted earnings per share increased to $0.38 from $0.25, mainly due to the higher Adjusted net income described above. Currency translation did not have a significant impact on Adjusted diluted earnings per share.

Previous wording

Fiscal year. We use a 52- or 53- week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. Certain of our foreign subsidiaries have fiscal years ending November 30. Each fiscal year generally consists of four 13-week quarters, with each quarter ending on the Sunday that is closest to the last day of the last month of that quarter. Each quarter of fiscal years 2024 and 2023 consists of 13 weeks, except for the fourth quarter of 2024, which will consist of 14 weeks and end on December 1, 2024.

Current wording

Fiscal year. We use a 52- or 53- week fiscal year, with each fiscal year ending on the Sunday that is closest to November 30 of that year. Certain of our foreign subsidiaries have fiscal years ending November 30. Each fiscal year generally consists of four 13-week quarters, with each quarter ending on the Sunday that is closest to the last day of the last month of that quarter. Fiscal year 2025 is a 52-week year, ending on November 30, 2025 and fiscal year 2024 was a 53-week year, ending on December 1, 2024. Each quarter of fiscal years 2025 and 2024 consists of 13 weeks, with the exception of the fourth quarter of 2024, which consisted of 14 weeks.

Previous wording

Segments. Our Levi’s Brands business, which includes Levi’s®, Levi Strauss Signature™ and Denizen® brands, is defined by geographical regions into three segments: Americas, Europe and Asia. Our Dockers® and Beyond Yoga® businesses are managed separately and separately do not meet the quantitative thresholds of a reportable segment and are reported in our financial statements under the caption of “Other Brands.” Effective in the second quarter of 2024, Dockers® and Beyond Yoga® businesses are disclosed as separate lines under the caption “Other Brands” to increase transparency of performance.

Current wording

Segments. Our Levi’s Brands business, which includes Levi’s®, Levi Strauss Signature™ and Denizen® brands, is defined by geographical regions into three segments: Americas, Europe and Asia. Our Beyond Yoga® business is managed separately.

Previous wording

•Cost of goods sold primarily comprises product costs, labor and related overhead, sourcing costs, inbound freight, internal transfers and the cost of operating our remaining manufacturing facilities, including the related depreciation expense. On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency.

Current wording

•Cost of goods sold primarily comprises product costs, labor and related overhead, sourcing costs, inbound freight, internal transfers and the cost of operating our manufacturing facilities, including the related depreciation expense. On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency.

Previous wording

•Selling expenses include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations.

Current wording

•Selling expenses reflected in SG&A include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations.

Previous wording

The following table presents, for the periods indicated, our consolidated statements of income, the changes in these items from period to period and these items expressed as a percentage of net revenues:

Current wording

The following table summarizes, for the periods indicated, our consolidated statements of operations, the changes in these items from period to period and these items expressed as a percentage of net revenues:

Previous wording

The following table presents net revenues for the periods indicated and the changes in net revenues on both reported and constant-currency basis from period to period.

Current wording

The following table presents net revenues for the periods indicated and the changes in net revenues on both reported and organic net revenues basis from period to period.

Previous wording

The increase in DTC revenue was attributable to growth across all markets, led by the U.S., for the three-month period ended August 25, 2024. Revenue growth was driven by both store performance and store expansion, as we benefited from 49 more company-operated stores in operation in the Americas as of August 25, 2024, as compared to August 27, 2023. E-commerce net revenues increased primarily due to higher online traffic and conversion.

Current wording

Organic net revenues increased for the three-month period ended March 2, 2025, compared to the prior-year period, driven by growth in our DTC and wholesale channels. The increase in DTC revenue was attributable to growth across all markets, led by the U.S. and Latin America, driven by both store performance and store expansion. We benefited from 45 more company-operated stores in operation in the Americas as of March 2, 2025, as compared to February 25, 2024. E-commerce organic net revenues also increased, primarily due to higher online traffic and conversion. Wholesale revenue increased primarily due to higher volume in the U.S., including from door and category expansion. Additionally, Colombia, which we acquired at the start of the second quarter of 2024, contributed $14 million to this quarter’s net revenue growth.

Previous wording

Asia. On a reported basis, net revenues in Asia increased for the three-month period ended August 25, 2024 and decreased for the nine-month period ended August 25, 2024. On a constant-currency basis, net revenues increased for both the three-month and nine-month periods ended August 25, 2024, with currency affecting net revenues unfavorably by approximately $8 million and $38 million, respectively.

Current wording

Asia. Net revenues in Asia increased for the three-month period ended March 2, 2025 on both reported and organic net revenues basis. Currency translation affected net revenues unfavorably by approximately $9 million for the three-month period ended March 2, 2025 .

Previous wording

The growth in DTC revenue was due to strong performance in our company-operated stores and e-commerce, as a result of increased volume driven by store expansion and higher average selling prices in company-operated stores and e-commerce, along with higher e-commerce traffic. Additionally, we benefited from 22 more company-operated stores in operation in Asia as of August 25, 2024 as compared to August 27, 2023. The increase in wholesale revenue was primarily due to an increase in units sold in our franchise channel.

Current wording

Organic net revenues for the three-month period ended March 2, 2025, as compared to the prior-year quarter, increased from growth in both our DTC and wholesale channels across most markets including the impact of price increases in Turkey, India and South Africa. The growth in DTC revenue was due primarily to store expansion and strong performance in our company-operated stores as a result of increased volume driven by higher traffic. We benefited from 37 more company-operated stores in operation in Asia as of March 2, 2025 as compared to February 25, 2024. The increase in wholesale revenue was primarily due to an increase in units sold.

Previous wording

•Beyond Yoga®. Net revenues in Beyond Yoga® increased on a reported and constant-currency basis for the three-month and nine-month periods ended August 25, 2024. Currency translation did not have an impact on net revenues. Net revenues grew across both our DTC and wholesale channels. The growth in our DTC channel was primarily due to growth in e-commerce as well as store expansion. The growth in our wholesale channel was primarily due to higher volume.

Current wording

Beyond Yoga®. Net revenues in Beyond Yoga® increased on a reported and organic net revenues basis for the three-month period ended March 2, 2025. Currency translation did not have an impact on net revenues. Organic net revenues grew across both our DTC and wholesale channels. The growth in our DTC channel was primarily due to growth in e-commerce.

Previous wording

DTC (Direct to Consumer). Net revenues in our DTC channel increased on both a reported and constant-currency basis for the three-month and nine-month periods ended August 25, 2024, with currency translation affecting net revenues unfavorably by approximately $12 million and $29 million, respectively. The increase was driven by store performance across brick-and-mortar mainline and outlet stores, as well as e-commerce. Our U.S. DTC business for the three-month and nine-month periods grew 12% and 11%, respectively. For both the three-month and nine-month periods ended August 25, 2024 net revenues from e-commerce grew 16%, driven by growth across the Levi’s and Beyond Yoga® brands. As a percentage of net revenues for the three-month and nine-month periods ended August 25, 2024, DTC comprised 44% and 46% of total net revenues, respectively.

Current wording

DTC (Direct to Consumer). Net revenues in our DTC channel increased on both a reported and organic net revenues basis for the three-month period ended March 2, 2025, with currency translation affecting net revenues unfavorably by approximately $22 million. The increase was driven by store performance across mainline and outlet stores, as well as e-commerce. Our U.S. DTC business for the three-month period grew 8%. For the three-month period ended March 2, 2025 net revenues from e-commerce grew 13%, driven by growth across the Levi’s®brands. As a percentage of net revenues for the three-month period ended March 2, 2025, DTC comprised 52% of total net revenues.

Previous wording

Currency translation impacted gross profit unfavorably by approximately $13 million and $25 million, respectively, for the three-month and nine-month periods ended August 25, 2024.

Current wording

Currency translation impacted gross profit unfavorably by approximately $27 million for the three-month period ended March 2, 2025.

Previous wording

For the three-month and nine-month periods ended August 25, 2024, the increase in gross margin was primarily driven by lower product costs and favorable channel and brand mix. Gross margin increased 50 basis points as a result of lower discounted sales for the three-month period ended August 25, 2024. Currency exchange, including transaction impacts, unfavorably impacted gross margin by approximately 30 basis points and 80 basis points for the three-month and nine-month periods ended August 25, 2024, respectively.

Current wording

For the three-month period ended March 2, 2025, the increase in gross margin was primarily driven by lower product costs, favorable channel and brand mix, and higher full priced sales. Additionally, gross margin increased approximately 40 basis points as a result of currency exchange, including transaction impacts.

Previous wording

Currency translation impacted SG&A favorably by approximately $8 million and $16 million for the three-month and nine-month periods ended August 25, 2024, respectively.

Current wording

Currency translation impacted SG&A favorably by approximately $17 million for the three-month period ended March 2, 2025.

Previous wording

Selling. Currency translation impacted selling expenses favorably by approximately $6 million and $11 million for the three-month and nine-month periods ended August 25, 2024, respectively. The increase in selling expenses for the three-month and nine-month periods ended August 25, 2024 was primarily due to DTC business expansion in the current year as compared to the prior year.

Current wording

Selling. Currency translation impacted selling expenses favorably by approximately $10 million for the three-month period ended March 2, 2025. Excluding the effects of currency, the increase in selling expenses for the three-month period ended March 2, 2025 was primarily due to DTC business expansion in the current year as compared to the prior-year period. This was offset by e-commerce related fulfillment costs that are now included as distribution expenses.

Previous wording

Advertising and promotion. Currency translation did not have a significant impact on advertising and promotion expenses for the three-month period and had a favorable impact of approximately $2 million for the nine-month period ended August 25, 2024. The increase in advertising and promotion expenses for the three-month period ended August 25, 2024 was primarily due to increased media spending. The decrease in advertising and promotion for the nine-month period ended August 25, 2024 was primarily due to decreased media spending in comparison to the prior year, which included expenses associated with the 150 th anniversary of the 501® jean campaign, partially offset by expenses associated with the Live in Levi’s campaign launched in the current year.

Current wording

Advertising and promotion. Currency translation impacted advertising and promotion expenses favorably by approximately $2 million for the three-month period ended March 2, 2025. The increase in advertising and promotion expenses for the three-month period ended March 2, 2025 was primarily due to increased media spending, primarily in the United States.

Previous wording

Currency translation impacted total operating income unfavorably by approximately $4 million and $9 million for the three-month and nine-month periods ended August 25, 2024, respectively.

Current wording

Currency translation impacted total operating income unfavorably by approximately $10 million for the three-month period ended March 2, 2025, respectively.

Previous wording

•Americas. Currency translation had an unfavorable impact of approximately $2 million for the three-month period ended August 25, 2024 and did not have a significant impact for the nine-month period ended August 25, 2024. The increases in operating income for the three-month and nine-month periods ended August 25, 2024 were primarily due to higher gross margins as compared to the prior year. Higher SG&A expense as a percent of revenue partially offset these increases in the three-month period ended August 25, 2024 compared to the prior year.

Current wording

•Americas. Currency translation had an unfavorable impact of approximately $3 million for the three-month period ended March 2, 2025. The increase in operating income for the three-month period ended March 2, 2025 was primarily due to higher revenues and higher gross margins as compared to the prior-year period. A decrease in SG&A as a percent of revenue also contributed to the increase in operating income in the three-month period ended March 2, 2025 compared to the prior-year period.

Previous wording

•Europe. Currency translation did not have a significant impact for the three-month period ended August 25, 2024 and had an unfavorable impact of approximately $2 million for the nine-month period ended August 25, 2024. The increase in operating income for the three months ended August 25, 2024 compared with the prior year was primarily due to higher revenues and higher gross margins. Higher gross margins during the nine-month period ended August 25, 2024 were offset by lower revenues and an increase in SG&A expense as a percent of revenue, resulting in a slight decrease in operating income compared with the prior year.

Current wording

•Europe. Currency translation had an unfavorable impact of approximately $6 million for the three-month period ended March 2, 2025. Excluding the effects of currency, operating income increased for the three months ended March 2, 2025 compared with the prior year primarily due to higher gross margins partially offset by lower revenues and an increase in SG&A as a percent of revenue.

Previous wording

•Beyond Yoga®. Currency translation did not have a significant impact for the three-month and nine-month periods ended August 25, 2024. The decrease in operating income for the three-month and nine-month periods ended August 25, 2024 as compared to the prior year was primarily due to higher SG&A expense as a percent of revenue and lower gross margins, partially offset by higher revenue.

Current wording

Beyond Yoga® operating loss. Currency translation did not have an impact for the three-month period ended March 2, 2025. The increase in operating loss for the three-month period ended March 2, 2025 as compared to the prior-year period was primarily due to higher SG&A as a percent of revenue and lower gross margins, partially offset by higher revenue.

Previous wording

Restructuring charges, net. During the three-month and nine-month periods ended August 25, 2024, we recognized restructuring charges of $3.4 million and $174.7 million, respectively, related to Project Fuel consisting primarily of severance and post-employment benefit charges.

Current wording

During the three-month period ended February 25, 2024, we recognized restructuring charges of $113.1 million, respectively, in connection with Project Fuel consisting primarily of severance and post-employment benefit charges.