Levi Strauss & Co · NYSE:LEVI
Levi Strauss & — Investor Day (October 2002)
18 slides from Levi Strauss &'s investor day presentation, Oct 31, 2002
Slide 1: Financial Community Meeting
EXHIBIT 99.1 Cover Slide Levi Strauss & Co. Financial Community Meeting October 2002 Slide 1: Forward Looking Statements This presentation contains forward-looking statements relating to possible or assumed future results of Levi Strauss & Co. It reflects the current views of Levi Strauss & Co. with
Slide 2: Global franchise and Levi's brand health
Europe • 2001 Net Sales: $1.1bn • 25% of Global • 91% Levi’s® Brand • 9% Dockers® Brand Global • 2001 Net Sales: $4.3bn • 75% Levi’s® Brand • 25% Dockers® Brand Slide 5: Levi’s® brand health is strong • According to August NPD study, in the U.S. Levi’s® is: — #1 in brand awareness — #1 in brand rete
Slide 3: Levi's and Dockers U.S. brand scores
Slide 8: Levi’s® U.S. brand scores: Women 15-24 Purchase Brand Ad Wear Most Intent Awareness Awareness Often LS&CO. 34% 63% 34% 12% LEI 35% 24% 12% 8% Mudd 32% 28% 13% 6% Gap 29% 27% 15% 6% Tommy Hilfiger 20% 20% 8% 3% Source: Market Facts, Q2 2002 Brand Vision Continuous Tracking Slide 9: Dockers®
Slide 4: The turnaround is occurring in three phases
Source: 3/18/02-6/23/02 Market Facts, 2002 Brand Vision Continuous Tracking Slide 11: The turnaround is occurring in three phases Bar chart and arrow graphic, 1999 to 2003. Graphic is for illustrative purposes only 1. Gain control • Slow down sales decline • Improved operating efficiency • Improved
Slide 5: Innovate and lead from the core
Slide 13: 1. Innovate and lead from the core • Overhauled product lines and exited non-core segments • Introduced superior fits, finishes and fabrics • Clear consumer/product/price segmentation strategy • Market leading product innovation • Product-focused advertising Slide 14: Photo of Levi’s® Engi
Slide 6: Achieve operational excellence; sell where they shop
Slide 21: Upgraded retail presentation Slide 22: 3. Achieve operational excellence • Moved from manufacturing to marketing organization — Strategic shift to 90% contract manufacturing in 2003 from 40% in 1997 • Lowered cost of sourcing worldwide • Improved flexibility and speed to market — Reduced “
Slide 7: Consumer segmentation and Type 1 jeans
Slide 25: The consumer segmentation strategy is designed to grow our Red Tab™ jeans business • Innovation cascade — Use high end retailers as a lab for innovative styles — Create lower priced versions of successful products for consumers who shop department and chain stores — Maintain rhythm of inno
Slide 8: Return on Management Investment 2001
Return on Management Investment—2001 Chart with Margin (Net Operating Profit after Taxes/Sales) on Y-axis from 2 to 10, and Turns (Sales/Average Management Investment) on X-axis from 1 to 4. The chart shows the following information: Margin Turns (Net Operating Profit after (Sales/Average Management
Slide 9: Commitment to our core customers
• Maintaining a rhythm of new, innovative and market leading products worldwide • Reinvesting plant closure savings to improve product and core customer economics • Continuing improvements in global supply chain cost, service and speed Slide 30: Commitment to Our Core Customers… Slide 31: We have ov
Slide 10: Most Americans shop at Wal-Mart; mass channel
Slide 35: Most Americans shop at Wal-Mart % of adults that shop Wal-Mart 67% JCPenny 33% Target 26% Sears 24% Costco 12% Macy’s 10% Source: NPDFashionworld Slide 36: Mass controls a large portion of apparel 2001 U.S. Apparel Market Mass 19% Vertically Integrated Specialty Stores 17% Chains, Departme
Slide 11: Levi Strauss Signature mass channel offering
Slide 38: We are differentiating our mass channel product offering Levi Strauss Signature™ logo • Leverages company’s 150 year-old history • Packaging highlights the features and benefits — Quality and authenticity • Distinct from Red Tab™ product with no tab and no arcuate (stitching) on back pocke
Slide 12: Third Quarter 2002 Results
• Maximize brand identification — Relevant signage — Focused packaging — Leverage customer promotions • Full U.S. rollout • Full range presentation with prime real estate Slide 42: Revitalized Levi’s® logo + Dockers® logo + New Levi Strauss Signature™ logo = Formula for Growth Slide 43: Bill Chiasso
Slide 13: Progress in each region; nine-month results
Slide 46: We are making progress in each region 3Q 2002 Revenues Favorable / (Unfavorable) vs. 2001 As Reported As Reported Constant Currency ($ In Millions) Americas $ 684 (0.9%) 0.1% Europe $ 255 14.6% 2.4% Asia Pacific $ 79 10.9% 7.2% Total LS&CO. $ 1,018 3.5% 1.2% Slide 47: Key drivers of stabil
Slide 14: Gross margins remain strong
Slide 49: Gross margins remain strong… Gross Margin 1999 38.1% 2000 42.1% 2001 42.2% 2002 YTD 42.3%(1) (1) Excludes restructuring related expenses Gross Profit % of Sales Change From Company 2001 ‘97 to’01 Ralph 47.8 2.9 Columbia 45.2 1.5 LS&CO. 42.2 0.0 Tommy 41.2 (6.0) Jones 41.1 8.9 Liz 40.6 0.4
Slide 15: Plant closures and efficient expense structure
Slide 50: Plant closures have made our cost structure more competitive 1997 1998 1999 2000 2001 2002 2003F ($ In Millions) Cumulative Annualized Savings $ 70 $ 165 $ 260 $ 340 $ 340 $ 390 $ 530 Cumulative Number of Facilities Closed 11 13 29 29 29 37 37 • Greater capacity to improve retailer economi
Slide 16: Supporting our brands; EBITDA margins; debt reduction
Slide 52: Commitment to supporting our brands Chart showing advertising and promotions spending as a percentage of revenue with Y-axis depicting % of revenue from 0% to 10% and X-axis depicting years from 1997 to 2002 on last 12 months basis. Chart shows for LS&CO. A&P spending was 6.9% of revenue i
Slide 17: 2002 targets and 2003 financial goals
Slide 55: We’re on track to achieve our 2002 financial targets Actuals Target 2000 2001 YTD 2002 Revenues(1) (7)% (7)% (5)% 0-(4)% Gross Margin(2) 42% 42% 42% 40-42% Operating Expenses (% of sales) 32% 32% 33% 31-33% EBITDA(2) Margin 13% 13% 12% 11-13% (1) On a constant currency basis. (2) Excludes
Slide 18: Refinancing update and summary
Slide 57: Refinancing update • We are confident in our ability to refinance upcoming debt maturities — Strong margins — Sales stabilization and strong prospects for growth — Proven commitment and ability to pay down debt • We are holding discussions with various financial institutions regarding fina