Levi Strauss & Co · NYSE:LEVI
Levi Strauss & — Non-Deal Roadshow (December 2019)
28 slides from Levi Strauss &'s roadshow presentation, December 2019
Slide 1: Investor Presentation Europe NDR December 2019
Investor Presentation Europe NDR December 2019 ©2019 Levi Strauss & Co.
Slide 2: Disclaimers
DISCLAIMERS FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements.” All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning our anticipated financial performa
Slide 3: Today's Presenters
TODAY’S PRESENTERS Chip Bergh Harmit Singh President & Chief Financial Officer Chief Executive Officer 1 PRIOR EXPERIENCE PRIOR EXPERIENCE Key Investor Contacts Chris Ogle and Aida Orphan Investor Relations (415) 501-6194 ©2019 Levi Strauss & Co. 3
Slide 4: Steps in the Ongoing Transformation
STEPS IN THE ONGOING TRANSFORMATION 1 Strategy • Grow the Profitable Core • Diversify Across Channels, Categories and Geographies 2 Significant Talent Upgrade • Senior Management and Board of Directors 3 Driving Financial Discipline • Pay Down Debt, Improve Returns 4 Investment Choices • DTC, Brand
Slide 5: Levi Strauss & Co. Is a Transformed Business
LEVI STRAUSS & CO. IS A TRANSFORMED BUSINESS (1) 29% 31% 55% EUROPE CAGR: +17% 2018 65% RETAIL COMPANY- OPERATED CAGR: +14% WHOLESALE AMERICAS NET REVENUES (INCLUDING 7% CAGR: +4% FRANCHISE) $5.6B CAGR: +4% 50,000+ ~3,000 RETAIL 69% 29% BRAND- LOCATIONS MEN’S(2) WOMEN’S(2) DEDICATED CAGR: +4% CAGR:
Slide 6: Our Strategies Are Working: QYTD 19
O U R S T R AT E G I E S A R E W O R K I N G : Q 3 Y T D 2 0 1 9 Drive the Expand Strengthen position Enhance operational profitable core for more as a leading excellence omni-channel retailer TOPS #1 JEANSWEAR BRAND GROSS MARGIN +19% DEEP FOCUS ON SEAMLESS GLOBALLY(1) + 40 BPS CONSUMER EXPERIENCE W
Slide 7: Europe 2018: Best Regional Example of the Brand's Potential
EUROPE 2018: OUR BEST REGIONAL EXAMPLE OF THE BRAND’S POTENTIAL SUBSTANTIAL GROWTH MEN’S VS. BOTTOM’S, TOPS’S, NET REVENUE WOMEN’S(1) FOOTWEAR & ACCESSORIES (1) Europe $1.6B 65% 2018 (29%) 3yrs MEN’s Total company Three consecutive years of double-digit constant- 35% 31% 57% 12% Revenue TOPS BOTTOMS
Slide 8: Segmented and Differentiated Wholesale Go-to-Market Strategy
SEGMENTED AND DIFFERENTIATED WHOLESALE GO -TO-MARKET STRATEGY DIVERSIFIED DISTRIBUTION NETWORK WHOLESALE STRATEGIES (1) DEPARTMENT STORES Enhancing partnerships with our key accounts MASS Expanding floor space at key accounts and adding new accounts SPECIALTY Diversifying categories DIGITAL to drivi
Slide 9: Expand for More: Tops and International
EXPAND FOR MORE: TOPS AND INTERNATIONAL Tops Momentum Is Strong Significant Market Growth Opportunities $1.1B of 2018 net revenues, Strong growth comprising a fifth +19% year-to-date of total net revenues Q3 2019 Growth is broad-based across tops subcategories Graphic tees +12% year-to-date Q3 2019
Slide 10: Consumer-Driven Product Innovation
CONSUMER-DRIVEN PRODUCT INNOVATION Innovated our product offerings to meet the evolving Digitizes denim finish design and reduces tastes of today’s consumers with an emphasis on finishing time fit, finish and fabric Improves inventory management Completed the women’s relaunch in 2015 Eliminates thou
Slide 11: Direct-to-Consumer Is a Core Component of Our Growth Strategy
DIRECT-TO-CONSUMER IS A CORE COMPONENT OF OUR GROWTH STRATEGY DTC business has grown from 29% of net revenues in 2015 Redesigning the shopping experience through to 37% of net revenues in the first nine months of 2019 customization and personalization with a focus on delivering a frictionless omni-c
Slide 12: ©2018 Levi Strauss ©2019 & Co. Levi CONFIDENTIAL
©2018 Levi Strauss ©2019 & Co. Levi CONFIDENTIAL Strauss & Co. 12
Slide 13: Profits Through Principles
PROFITS THROUGH PRINCIPLES GIVING BACK ADVOCATING FOR SOCIAL & ENVIRONMENTAL TO OUR COMMUNITIES WHAT’S RIGHT SUSTAINABILITY 2020 Targets Community Engagement Tackling Climate Change 100% Sustainably-Sourced Cotton Gun Violence Prevention 80+% of Levi’s® Products are Water<less® Levi Strauss Foundati
Slide 14: Levi's: Opportunities for Consistent Sustainable Growth
LEVI’S ® : OPPORTUNITIES FOR CONSISTENT SUSTAINABLE GROWTH POTENTIAL TO ENTER AND EXPAND IN OTHER CATEGORIES THAT ARE SMALLER FOR US TODAY TOPS HAVE NEARLY DOUBLED AS A PERCENTAGE OF TOTAL NET REVENUES SINCE 2015 SIGNIFICANT SUCCESS IN WOMEN’S BOTTOMS SINCE 2015 RELAUNCH MEN’S BOTTOMS: CONTINUED SOL
Slide 15: Financial Overview
FINANCIAL OVERVIEW ©2019 Levi Strauss & Co. 15
Slide 16: Financial Executive Summary
FINANCIAL EXECUTIVE SUMMARY 1 2 3 4 We have a consistent delivered six We believe future growth We have improved our Our top capital allocation track record years consecutive of delivering of will be fueled by continued overall financial profile priorities are reinvesting strong strongfinancial fina
Slide 17: We Have Grown Through Diversification Across Markets, Channels and Categories
WE HAVE GROWN THROUGH DIVERSIFICATION ACROSS MARKETS, CHANNELS AND PRODUCT CATEGORIES (1) Strong growth in key focus areas … … changing the composition of LS&Co. today and for the future Our U.S. wholesale business is slightly larger today than it was in 2015—yet declined as a % of total net revenue
Slide 18: Strong Q3 Year-to-Date Financial Performance
STRONG Q3 YEAR-TO-DATE FINANCIAL PERFORMANCE Q3 YTD + 8% + 40 bps + 11% + 30 bps +16% $0.85 (1) Year-over-year comparisons in constant-currency; note that the company’s constant-currency methodology excludes translation effects by translating prior-year local currency amounts at current period excha
Slide 19: Capital Allocation Strategy to Grow and Deliver Strong Shareholder Returns
CAPITAL ALLOCATION STRATEGY TO GROW AND DELIVER STRONG SHAREHOLDER RETURNS 1 2 3 Reinvest for Growth Return Capital to Acquisitions Invest in organic opportunities Shareholders Evaluate both organic and & initiatives inorganic acquisitions that Dividends support our current strategies Target cash di
Slide 20: Financial Growth Model
FINANCIAL GROWTH MODEL (ANNUALIZED, EXCLUDING CURRENCY EFFECTS) Net Revenue Adjusted EBIT Adjusted Net Income Mid-Single Digits Mid- to High- High-Single to Single Digits Low-Double Digits • By Geography • Leverage on revenue via • Leverage on fixed Adjusted EBIT margin interest expense • By Global
Slide 21: ...Ready for the Next 165 Years
…ready for the next 165 years ©2019 Levi Strauss & Co.
Slide 22: Appendix
Appendix ©2019 Levi Strauss & Co.
Slide 23: Our Core: Levi's Brand Men's Bottoms
OUR CORE: LEVI’S ® BRAND MEN’S BOTTOMS +3% Q3 YEAR -TO-DATE Where We Are Today Growth Opportunities The 501 by itself is bigger Updated styles, fabrics, fit and finish #1 Jeanswear Brand to appeal to evolving consumer base than entire denim lines Globally(1) at many peer brands(1) Expand internation
Slide 24: Expand for More: Women's
EXPAND FOR MORE: WOMEN’S Where We Are Today Growth Opportunities $1.6B of 2018 net revenues, Completed Women’s line New fits and finishes including comprising nearly a third relaunch in 2015 non-denim and shorts of total net revenues Broad-based growth Strong growth Strengthen position in regions ou
Slide 25: Global Footprint: International Revenues 57% of Total Q3 YTD
GLOBAL FOOTPRINT: INTERNATIONAL REVENUES 57% OF TOTAL Q3 YTD The Levi’s® brand has the highest brand awareness in the denim China represented bottoms category roughly 20% of the global apparel globally and is the market, but only represented 3% of our net revenues in #1 brand globally fiscal year 20
Slide 26: Direct-to-Consumer: Innovating in the Right Areas
DIRECT-TO-CONSUMER: INNOVATING IN THE RIGHT AREAS IN-STORE EXPERIENCE MOBILE APP FIT EXPERIENCE ASK INDIGO TAILOR SHOP OMNI-CHANNEL INITIATIVES SOCIAL MEDIA PAYMENT EXPERIENCE Facebook marketplace and/or LSE channel on mobile Facebook marketplace and/or LSE channel on mobile ©2019 Levi Strauss & Co.
Slide 27: Our Competitive Strengths Have Created Significant Value
OUR COMPETITIVE STRENGTHS HAVE CREATED SIGNIFICANT VALUE BRANDS Iconic brands with deep heritage, superior product quality and a culture of innovation CONNECTION WITH CONSUMERS Unique connection with our consumers BUSINESS MODEL Robust, diversified business model across multiple regions, channels an
Slide 28: We Have Strengthened Our Balance Sheet
WE HAVE STRENGTHENED OUR BALANCE SHEET – IT IS NOW AN ENABLER OF GROWTH 2011 FROM: 2015 TO: 2018 $2.0B $1.1B $0.7B $0.3B 3.8x 1.5x $55MM $159MM (1) Net Debt calculated as gross debt less cash and cash equivalents. (2) Leverage Ratio = Gross Debt / Adjusted EBITDA. Adjusted EBITDA is defined as Adjus