Levi Strauss & Co. (NYSE: LEVI) will host an Investor Day today at its New York City Showroom, featuring presentations by members of the leadership team that will review the company’s key growth drivers, long-term strategic priorities and updated growth targets. The company will also reaffirm expectations for fiscal 2022 for net revenue growth of 11% to 13% compared to FY 2021 to between $6.4 billion and $6.5 billion and adjusted diluted EPS of $1.50-to-$1.56.
“We are emerging from the pandemic a much stronger, more profitable company than we were at the time of our IPO in 2019, having made meaningful progress on executing our strategy and diversifying our portfolio,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “We are entering this next phase of growth with strong momentum, proven execution and a bold strategy to increase profitable top-line growth annually by 6-8%, growing our direct-to-consumer business to 55% of revenue, and nearly doubling the women’s business.”
Senior executives will provide an update on the company’s long-term growth strategy, which is designed to propel the company toward its goal to achieve $9 billion to $10 billion in revenues and 15% adjusted EBIT margin by 2027. By advancing its most impactful growth drivers – Brand Led, Direct to Consumer (DTC) First and Diversify the Portfolio, the company plans to accelerate revenue growth and profitability, while increasing reinvestment and capital returns to create significant value for all its stakeholders.
Brand Led: The company will elevate and strengthen the Levi’s® brands (which include Signature by Levi Strauss & Co.TM and Denizen®), Dockers® and Beyond Yoga® by more effectively integrating product, design, marketing and consumer in-store experiences with a global vision executed consistently across all markets. This is expected to support targeted revenue growth for the Levi’s® brands of approximately $2 to $2.5 billion and for Dockers® and Beyond Yoga® combined revenue to approach $1 billion by 2027.
DTC First: The company will accelerate investment in stores, online platforms and other digital capabilities while creating an integrated omnichannel shopping experience, which is expected to profitably drive this channel to 55% of annual net revenues by 2027 while tripling the eCommerce business.
Diversify the Portfolio: The company will further capitalize on the substantial opportunity to amplify each brand’s reach and grow share across geographies, categories, genders and channels. The company expects to nearly double both the women’s and tops revenue by 2027.
To support this growth, the company will continue to invest in digital, data and AI capabilities as drivers of business performance, focused on increasing consumer loyalty, facilitating speed to market timelines and improving profitability. As part of this digital transformation, the company will also continue to upgrade its enterprise resource planning system and automate and digitize key processes, while seamlessly linking its own enterprise systems, to create a more simplified, productive work environment.
Long-Term Financial Targets
“Execution of our strategy is expected to accelerate top-line growth and adjusted EBIT margin expansion to 15% over the next five years, and we have proven we can execute in both good and tough times,” said Chief Financial Officer Harmit Singh, “We believe our strong profitable growth and return on invested capital will generate ample free cash flow to fund investments in our business and to drive higher shareholder returns with an annual target of 10-12%.”
At the Investor Day, the company will introduce an accelerated five-year growth algorithm for the period from fiscal year 2022 to fiscal year 2027, including:
- 6-8% annual net revenue growth up from prior targets of 4-6%.
- Adjusted EBIT margin improvement to 15%.
- Commitment to increasing shareholder returns through a new dividend payout target and recently approved share repurchase program of $750 million.
Share Repurchase Program
Under the terms of the share repurchase program, the company may purchase shares of its Class A Common Stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans. The timing and actual number of shares repurchased will depend on a variety of factors, including stock price, trading volume, market conditions, corporate and regulatory requirements, and other general business considerations. The share repurchase program does not have an expiration date.
Webcast and Materials
The live event will be available via webcast at the company’s investor relations website, investors.levistrauss.com. Presentation slides and a recording of the event will also be available on the investor section of the company’s website after the conclusion of the Investor Day.