Levi Strauss & Co · NYSE:LEVI
Levi Strauss & — Investor Presentation (April 2008)
25 slides from Levi Strauss &'s investor presentation, Apr 8, 2008
Slide 1: April 8, 2008 Investor Presentation
April 8, 2008 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains, in addition to historical information, certain forward-looking statements that are based on our current assumptions, expectations and projections about future events. These forward-looking statements are necessarily estimates reflecting the best
Slide 3: Best Known Apparel Brands in the World
Best Known Apparel Brands in the World
Slide 4: Diversified Globally
Diversified Globally North America Net Revenue Operating Margin $2,541MM 15.4% Europe Net Revenue Operating Margin $1,016MM 21.7% Asia Net Revenue Operating Margin $805MM 15.2% FY 2007
Slide 5: Updates - Levi's Brand
Voted #1 Global Jeans Brand "The clear global favorite is Levi's with more than one in five respondents nominating the classic brand as their most preferred choice." - Synovate, March 3, 2008 Starred on "Project Runway" Recent Collaboration with Nike Updates - Levi's(r) Brand
Slide 6: Updates - Dockers Brand
Updates - Dockers(r) Brand Sponsorship of AT&T Pebble Beach National Pro-Am New marketing campaign Opened first retail store in China
Slide 7: LS&CO. Strategies
LS&CO. Strategies Grow through innovation and premiumization Extend our brands globally Expand and enhance our wholesale business Accelerate growth with controlled retail Embed a culture of sustained, profitable growth Relentless focus on productivity
Slide 8: Innovation & Premiumization
Men Other 4th Qtr East 72 28 20.4 West 30.6 38.6 31.6 North 45.9 46.9 43.9 Product & marketing innovation Extending brands: categories & consumers Focus on premium categories 2007 Innovation & Premiumization Consumer Group Mix Men 72% Women and Kids 28%
Slide 9: Extend Brands Globally
Leading jeans brand globally Accelerate growth globally Leverage global presence Source: Retail Forward, Global Soft Goods Retailing, March 2007, CAGR is a measure of nominal spending 2006-2011 Clothing & Footwear CAGR for key growing markets Extend Brands Globally Malaysia China Vietnam India Turke
Slide 10: Global Brands: North America
Global Brands 2007 Net Revenue N. America 58% 2007 Operating Income N. America 53% U.S. Levi's(r) brand performing well U.S. Dockers(r) Women's growing U.S. Signature being repositioned North America Net Revenue Operating Income % Margin 2007 2,541 392 15% vs. PY Stable (2)% Stable
Slide 11: Global Brands: Europe
2007 Net Revenue Europe 23% Europe 30% 2007 Operating Income Global Brands Solid growth across all markets, helped by currency Operating income up double digits Investing in more advertising Europe 2007 1,016 221 22% vs. PY 13% 15% Stable Net Revenue Operating Income % Margin
Slide 12: Global Brands: Asia Pacific
Net Revenue Operating Income % Margin 2007 805 122 15% vs. PY 6% (14)% (3)ppt 2007 Net Revenue APD 19% APD 17% 2007 Operating Income Global Brands Strong growth in emerging markets Addressing challenges in mature markets Asia Pacific
Slide 13: Global Brands: 2008 Q1 Results
Net Revenue Operating Income % Margin Global Brands 2008 vs PY 174 8% 31 12% 18% Stable Americas Q1 results reflect weak Signature brand performance, early U.S. shipments Europe delivering solid growth, helped by currency Asia growth from emerging markets, helped by currency 2008 Q1 Results 2008 vs
Slide 14: Growth in Wholesale
2006 2007 96 94 4 6 Drive consumer traffic and demand Generate competitive economics New, more premium doors Differentiated assortments Company- operated Stores Wholesale Sources of Revenue Wholesale 96% 4% Growth in Wholesale 94% 6%
Slide 15: Growth in Company-operated Retail
2005 2006 2007 67 138 200 Incremental distribution Showcase full breadth of product offerings Retail insights to wholesale customers Growth in Company- operated Retail Company-operated Stores 67 138 200 Company-operated Retail Dockers(r) Levi's(r)
Slide 16: Productivity & Profitable Growth
Attract and develop world class talent Focus on Total Shareholder Return Performance Culture Global scale Procurement efficiencies Working capital management Productivity Sustained, profitable growth Productivity & Profitable Growth
Slide 17: LS&CO. Transformation
LS&CO. Transformation 2007 4% Growth 15% $460MM $1.8B 2003 1% Decline 8% ($349MM) $2.2B Net Revenue1 Operating Margin Net Income Net Debt2 1 % change vs. prior year, as reported 2 Net Debt = Gross Debt (Excl. Capital Lease) minus Cash (including cash equivalents and restricted cash)
Slide 18: 2003 - 2007 Financial Performance
2003 - 2007 Financial Performance Net Revenue Operating Income 2003 2004 2006 2007 $4,361 $641 $4,150 $313 ($31) 2005 EBT $376
Slide 19: LS&CO. Q1 Financials
LS&CO. Q1 Financials Net Revenue up, helped by currency Operating income reflects lower benefit plan curtailment gain Continued solid gross and operating margins Net income reflects lower interest and tax rate 2008 2007 Revenue Net Revenue $1,083 4% 100% Key Financials % vs. % of Net Gross Profit 54
Slide 20: LS&CO. Transformation
Redefined business model Sharpened brand positioning Improved product & brand equity Invested in growth Productivity to fuel investments Closed manufacturing Overhead reduction Customer/product profitability Driving cash flow and generating savings through 2007 Build business and invest LS&CO. Trans
Slide 21: Debt Restructuring Completed
Debt Restructuring Completed 2005 2006 2007 East 264 251 216 $1.8B Net Debt $2.1B Interest Expense ($MM) $264 $251 $216 18% Reduction Change in Net Debt $62 $(148) $(134)
Slide 22: Reduced Incremental Borrowing Rates
2003 2005 2007 Rates 0.1225 0.0975 0.074 Reduced Incremental Borrowing Rates $575MM 12.25% Notes $450MM 9.75% Notes $325MM L+2.25% Loan $250MM L+2.50% Loan L = 3 month LIBOR as of 11/25/07
Slide 23: Debt Maturities at Q1 2008
2012 2013 2014 2015 2016 ABL - Borrowed 232 ABL - Reserved 79 ABL - Available 439 8.625% Euro Notes due 2013 374 Term Loan - Unsecured 323 9.75% Notes due 2015 450 8.875% Notes due 2016 350 4.25% Yen Notes due 2016 187 Debt Maturities at Q1 2008 ABL - Borrowed 8.625% Euro Notes due 2013 8.875% Notes
Slide 24: Sustain Strong Margins
Sustain Strong Margins 5.4 13.3 13.3 13.9 14.7 Liz Claiborne VF Nike Ralph Lauren LS&CO. 2007 Operating Income % of Net Revenue Peer Group 13.3 46.4 46.8 53.6 43.5 44.4 2007 Gross Profit % of Net Revenue Peer Group 45.4 18.9 25.2 25.4 35.4 Nike* VF LS&CO. Ralph Lauren Liz Claiborne Peer Group 30.3 3
Slide 25: 2008 Outlook
Focus on: Cash flow from operations Building brands Expanding retail network Caution: Consumer spending and economic outlook 2008 Outlook