Levi Strauss & Co.

Company Overview

Business Model: Levi Strauss & Co. designs, markets, and sells a broad range of apparel and related accessories, including jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, and jackets. The company operates under its Levi’s®, Levi Strauss Signature™, Denizen®, and Beyond Yoga® brands. Products are distributed globally, either directly to consumers (DTC) or through third-party retailers and licensees. In a strategic move, the company discontinued the Denizen® brand, with operations substantially complete as of March 2, 2025. Additionally, Levi Strauss & Co. entered into a definitive agreement to sell its Dockers® business, completing the sale of its intellectual property and operations in the U.S. and Canada on July 31, 2025, with the remaining operations expected to close in the first quarter of 2026.

Market Position: Levi Strauss & Co. is one of the world's largest brand-name apparel companies. Its Levi's® brand holds the #1 global position in jeanswear, measured by total retail sales, and is recognized as an authentic and original lifestyle brand. The company's products are sold in approximately 120 countries and across 50,000 retail locations worldwide, including approximately 3,300 brand-dedicated stores and shop-in-shops. The company maintains leadership in men's bottoms denim globally while actively pursuing growth in women's and tops categories.

Recent Strategic Developments:

• Brand Portfolio Optimization: Discontinued the Denizen® brand and divested the Dockers® business to streamline its brand portfolio.
• Project Fuel Initiative: Launched in the first quarter of fiscal year 2024, this multi-year global productivity initiative aims to accelerate the "Brand Led" and "DTC First" strategies. It focuses on optimizing the operating model, redesigning business processes, and reducing costs. The initiative was substantially complete as of November 30, 2025, with ongoing efforts including the transition of global distribution and fulfillment centers to third-party logistics providers.
• DTC First Strategy: Emphasizes building a harmonized omni-channel marketplace through increased investments in stores, expanding brick-and-mortar retail footprint (focusing on mainline expansion), and enhancing technology for in-store, e-commerce, and omni-channel capabilities.
• Brand Led Strategy: Aims to elevate and strengthen all brands by integrating product, design, positioning, marketing, and consumer experience to ensure they are at the "Center of Culture." This includes driving growth in women's and tops categories beyond jeans.
• Product Innovation: Launched the Levi’s® Blue Tab™ collection in February 2025, a premium line featuring updated fits and Japanese denim.
• Marketing & Engagement: Expanded global loyalty programs in 2025 to deepen direct, personalized consumer relationships. Executed integrated global campaigns such as "REIIMAGINE" with Beyoncé and "Global Icons" with Shaboozey and Matty Matheson.

Geographic Footprint: Levi Strauss & Co. operates globally, with products sold in approximately 120 countries. Over half of its net revenues in fiscal year 2025 were derived from outside the United States. The company's Levi's Brands business is organized into three reportable segments: Americas, Europe, and Asia. The Beyond Yoga® business is managed separately and primarily operates in the United States. As of November 30, 2025, the company operated 1,231 company-operated stores across 38 countries (473 in Americas, 300 in Europe, 444 in Asia for Levi's®; 14 for Beyond Yoga®) and approximately 500 company-operated shop-in-shops. Additionally, there are approximately 1,300 franchised or other brand-dedicated stores and shop-in-shops operated by independent third parties, primarily outside the United States. The primary corporate office is in San Francisco, California, with additional commercial support offices in Diegem, Belgium, and Singapore.

Financial Performance

(All figures are from continuing operations and exclude the Dockers® business unless otherwise specified.)

Revenue Analysis

Profitability Metrics:

• Gross Margin: 61.7% (FY2025) vs. 60.6% (FY2024)
• Operating Margin: 10.8% (FY2025) vs. 4.4% (FY2024)
• Net Margin: 8.0% (FY2025) vs. 3.5% (FY2024)

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed as a separate line item.
• Capital Expenditures: $221.4 million (FY2025)
• Strategic Investments: The company concentrates capital investments in new stores, distribution capacity, and technology to accelerate profitable business growth.

Business Segment Analysis

Americas (Levi's Brands)

Financial Performance:

• Revenue: $3,297.0 million (+3.0% YoY reported, +6.8% YoY organic)
• Operating Margin: 21.9%
• Key Growth Drivers: Growth in the direct-to-consumer (DTC) channel, led by the U.S. and Latin America, driven by higher store traffic and increased average revenues per unit. E-commerce revenues also increased due to higher online traffic. Organic wholesale revenues grew due to higher volume in the U.S. and Latin America, supported by door and category expansion and price increases. The acquisition of Colombia operations contributed $22.4 million to net revenue growth in fiscal year 2025.

Product Portfolio:

• Includes Levi's®, Levi Strauss Signature™, and Denizen® brands (Denizen® wind down substantially complete).
• Offers denim jeans, casual pants, tops, and jackets.

Market Dynamics:

• Primary distribution channels include chain retailers, department stores, and mass channel retailers (for Levi Strauss Signature™).

Europe (Levi's Brands)

Financial Performance:

• Revenue: $1,699.3 million (+5.0% YoY reported, +7.4% YoY organic)
• Operating Margin: 21.6%
• Key Growth Drivers: Strong growth in the DTC channel, driven by store performance and increased e-commerce revenues from higher traffic and conversion. Organic wholesale revenues increased due to higher volumes, including a strategic shift in fourth-quarter 2025 shipments to provide products earlier to wholesale customers.

Product Portfolio:

• Includes Levi's®, Levi Strauss Signature™, and Denizen® brands (Denizen® wind down substantially complete).
• Offers denim jeans, casual pants, tops, and jackets.

Market Dynamics:

• Distribution through department stores, specialty retailers, franchised or other brand-dedicated stores, and shop-in-shops.

Asia (Levi's Brands)

Financial Performance:

• Revenue: $1,134.4 million (+4.8% YoY reported, +6.6% YoY organic)
• Operating Margin: 13.1%
• Key Growth Drivers: DTC channel growth, primarily from store expansion (38 more stores in operation as of November 30, 2025) and strong performance in company-operated stores due to increased traffic. E-commerce revenues also benefited from successful marketing and promotions. Price increases, particularly in Turkey and India, contributed to revenue growth.

Product Portfolio:

• Includes Levi's®, Levi Strauss Signature™, and Denizen® brands (Denizen® wind down substantially complete).
• Offers denim jeans, casual pants, tops, and jackets.

Market Dynamics:

• Distribution through department stores, specialty retailers, franchised or other brand-dedicated stores, and shop-in-shops.

Beyond Yoga®

Financial Performance:

• Revenue: $151.3 million (+15.4% YoY reported, +17.1% YoY organic)
• Operating Margin: -9.0% (operating loss decreased from $(20.0) million in FY2024 to $(13.6) million in FY2025)
• Key Growth Drivers: Primarily driven by growth in e-commerce net revenues, partially offset by a decrease in wholesale net revenues.

Product Portfolio:

• Premium athleisure apparel focused on quality, fit, and comfort for all shapes and sizes (XXS-4X), made with soft, easy-care fabrics.

Market Dynamics:

• Primarily sold in the United States through specialty retailers, pure-play wholesalers, brand-dedicated company-operated retail stores, and a company-operated e-commerce site. The brand has 14 total stores.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $150.0 million was spent on share repurchases in fiscal year 2025, resulting in the retirement of approximately 7.2 million shares at an average price of $20.80 per share. This included an accelerated share repurchase transaction of $120.0 million and open market repurchases of $30.0 million.
• Dividend Payments: $212.9 million in cash dividends were paid in fiscal year 2025. A quarterly dividend of $0.14 per share, totaling approximately $55 million, was declared subsequent to fiscal year-end for payment in February 2026.
• Future Capital Return Commitments: The company aims to return 55-65% of its Adjusted free cash flow to stockholders through dividends and share repurchases, targeting a dividend payout ratio of 25-35% of net income.

Balance Sheet Position (as of November 30, 2025):

• Cash and Equivalents: $757.9 million
• Total Debt: $1,039.2 million (long-term debt)
• Net Cash Position: $(281.3) million
• Credit Rating: BB+ by S&P Global Ratings, Ba1 by Moody’s Investors Service, Inc, and BBB- by Fitch Ratings, Inc.
• Debt Maturity Profile: The company has $1.1 billion in required aggregate debt principal payments on its unsecured long-term debt, with payments commencing in 2030. There were no short-term borrowings as of November 30, 2025.

Cash Flow Generation (Fiscal Year 2025):

• Operating Cash Flow: $529.6 million
• Free Cash Flow (Adjusted Free Cash Flow): $308.2 million
• Cash Conversion Metrics: The company's operational excellence initiatives aim to improve inventory turns, working capital, and the cash conversion cycle.

Operational Excellence

Production & Service Model: Levi Strauss & Co.'s global sourcing and logistics organizations manage products from design concept through production to customer delivery. The company aims to leverage its global scale for product development and sourcing efficiencies, reduce total product and distribution costs, and maintain product quality, local service levels, and working capital management. Nearly all products are sourced through independent contract manufacturers, supplemented by one company-operated manufacturing and finishing plant in South Africa. The company is transitioning its distribution strategy from an owned and operated model to a mix of owned and third-party operated distribution centers.

Supply Chain Architecture: Key Suppliers & Partners:

• Contract Manufacturers: Products are sourced from numerous independent contract manufacturers located in approximately 32 countries, with no single country accounting for more than 30% of sourcing. These manufacturers are located across North and South Asia, the Americas (including the United States), Europe, and Africa.
• Third-Party Logistics Providers: The company is transitioning the operation of certain global distribution and fulfillment centers to third-party logistics providers, including facilities in Groveport, Ohio, and Dorsten, Germany.
• Raw Material Suppliers: Principal fibers, primarily cotton, synthetics, and man-made cellulosics, are sourced from various suppliers. Product costs are influenced by the market price and availability of these raw materials.
• Supplier Engagement: All third-party vendors, including licensees and their subcontractors, are required to adhere to the company's supplier code of conduct, which covers working conditions, environmental protection, employment practices, and ethical conduct. Compliance is monitored through periodic on-site inspections and verification activities.

Facility Network (as of November 30, 2025):

• Manufacturing: One leased facility in Cape Town, South Africa.
• Research & Development: Leased design and product development facilities in San Francisco, California.
• Distribution: Operates 11 company-owned/leased distribution centers globally (e.g., Erlanger, KY; Hebron, KY; Henderson, NV; Etobicoke, Canada; Itapevi, Brazil; Cuautitlan, Mexico; Villa El Salvador, Peru; Pudahuel, Chile; Northampton, U.K.; Itagui, Colombia) and utilizes two third-party operated distribution centers (Dorsten, Germany; Groveport, OH).
• Corporate/Administrative: Global headquarters in San Francisco, California (leased), with additional commercial support offices in Diegem, Belgium, and Singapore. Finance shared service centers are located in Eugene, Oregon, and Bangalore, India. A data center is operated in Westlake, Texas.

Operational Metrics: The company's operational excellence initiatives are focused on improving its speed-to-market calendar, reducing complexity, streamlining processes, and creating fewer touch points as merchandise moves to market. These actions are intended to drive efficiencies, reduce lead times, enable quicker responses to changes in consumer demand, and improve inventory turns, working capital, and the cash conversion cycle.

Market Access & Customer Relationships

Go-to-Market Strategy: Levi Strauss & Co. employs a multi-channel approach to make its products available where consumers shop, offering both in-store and online experiences tailored to wholesale customers and retail consumers. Distribution Channels:

• Direct Sales: Includes 1,231 company-operated mainline and outlet stores across 38 countries, company-operated e-commerce sites (e.g., www.levi.com, www.beyondyoga.com) which represented 11% of total net revenues in fiscal year 2025, and approximately 500 company-operated shop-in-shops within department stores and other third-party retail locations.
• Channel Partners: Comprises sales through third-party retailers such as department stores, specialty retailers, mass channel retailers, third-party e-commerce sites, approximately 1,300 franchised or other brand-dedicated stores, and approximately 90 third-party operated shop-in-shops, primarily in international markets.

Customer Portfolio: Enterprise Customers:

• Sales to the top ten wholesale customers accounted for 24% of total net revenues in fiscal year 2025.
• Customer Concentration: No single customer represented 10% or more of total net revenues in fiscal year 2025.

Geographic Revenue Distribution (Fiscal Year 2025):

• United States: $2,674.1 million (42.6% of total net revenues)
• Foreign Countries: $3,607.9 million (57.4% of total net revenues)
• Growth Markets: The company's international business, encompassing its Europe and Asia segments, along with Canada and Latin America from its Americas segment, generated 57% of net revenues in fiscal year 2025.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The global apparel industry is highly competitive and fragmented, characterized by low barriers to entry, numerous regional and local competitors, and an increasing number of global players. It is influenced by constantly evolving fashion trends, consumer preferences (including a shift towards digital engagement, social media communication, experiential spending, and sustainable products), and the rapid replication of new products. Macroeconomic pressures such as tariffs, inflation, and recession fears contribute to intense pricing pressure and uncertainty throughout the supply chain.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The company faces competition from a broad range of entities globally and locally, including vertically integrated specialty stores, other jeanswear brands, khakiwear brands, athletic and activewear companies, retailers' private or exclusive labels, and various e-commerce sites. Some competitors possess greater resources.

Emerging Competitive Threats: New market entrants, disruptive technologies, and alternative solutions pose ongoing competitive threats. The increasing use of artificial intelligence (AI) shopping assistant tools could transform commerce and impact the company's ability to efficiently attract and retain customers.

Competitive Response Strategy: Levi Strauss & Co. addresses competitive challenges through its core business strategies: "Brand Led" (elevating and strengthening brands through integrated product, design, marketing, and consumer experience), "DTC First" (expanding brand-dedicated stores, e-commerce, and omni-channel capabilities), and "Power the Portfolio" (accelerating global reach and diversifying across geographies, categories, genders, and channels). These strategies are supported by a focus on operational excellence and a "One Team" mindset, alongside aggressive cost management to fund growth investments.

Risk Assessment Framework

Strategic & Market Risks

• Global Economic Conditions: The business is exposed to adverse effects from global economic conditions, including inflation, container shipping disruptions, foreign currency fluctuations, changes in trade policies, and potential economic slowdowns or recessions. These factors can impact revenue, operating margins, and net income.
• Consumer Spending: Sales are influenced by discretionary consumer spending. Declines in spending can lead to reduced demand, increased inventories, lower revenues, higher discounts, and pricing pressure.
• Brand Value and Reputation: Success is highly dependent on maintaining the value and reputation of its brands. Risks include failure to deliver high-quality products, product recalls, negative publicity (including social media), or adverse reactions to the company's positions on social issues.
• Consumer Demand and Market Conditions: The company faces risks from failing to accurately forecast and respond to rapidly changing fashion trends, consumer preferences, and the quick replication of products by competitors. This can lead to limited sales growth, adverse retail and consumer acceptance, and inventory management challenges.
• Technology Disruption: The company's reliance on technology, including data analytics and artificial intelligence, exposes it to risks from rapid technological change and the potential impact of new tools like AI shopping assistants on consumer behavior.
• Customer Concentration: A significant portion of revenues (24% in FY2025) comes from its top ten wholesale customers. The loss of a major customer or a decline in their financial health could adversely affect sales and financial condition.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Reliance on independent contract manufacturers globally creates risks related to securing production capacity, maintaining quality standards, timely shipments, and compliance with labor and environmental standards. Production concentration at certain factories increases vulnerability to disruptions.
• Raw Material Prices: Fluctuations in the price and availability of key raw materials, primarily cotton, due to factors like demand, crop yields, climate change, and government policies, can increase the cost of goods and negatively impact financial results.
• Distribution and Logistics: The company relies on both owned and third-party distribution facilities. The ongoing transition to third-party logistics providers and potential disruptions from work stoppages, labor shortages, port congestion, or natural disasters can affect timely order fulfillment and increase costs.
• Information Technology and Data: Heavy dependence on IT systems across all operations. Risks include security incidents, cyber-attacks (e.g., ransomware, phishing), system failures, data theft, and the inability to effectively scale or adapt systems, which could disrupt business and harm reputation.
• Outsourcing: Increased reliance on third-party service providers for IT, finance, customer relations, and distribution functions introduces risks if these providers fail to meet performance standards, ensure data security, or comply with regulations.

Financial & Regulatory Risks

• Foreign Exchange Risk: Significant international revenues and sourcing expose the company to fluctuations in foreign currency exchange rates, which can impact operating results and cash flows.
• Debt and Interest Payments: Substantial unsecured debt ($1.0 billion as of November 30, 2025) requires significant cash flow for interest and principal payments, potentially restricting future operations and limiting financial flexibility.
• Credit Ratings: A downgrade in credit ratings could increase borrowing costs and limit financing options.
• Regulatory and Compliance: The company operates under a complex array of federal, state, local, and foreign laws and regulations (e.g., labor, environmental, trade, customs, data privacy, anti-corruption). Non-compliance can lead to investigations, fines, and reputational damage.
• Trade Policy and Tariffs: Changes in trade policies, imposition of new tariffs, or retaliatory actions by other countries can increase import costs, affect product demand, and disrupt the supply chain.
• Intellectual Property: Risks include the inability to adequately protect or enforce trademarks and patents against counterfeiting or infringement, particularly in foreign jurisdictions, and potential claims of infringing others' intellectual property rights.
• Tax Legislation: New tax legislation (e.g., OBBBA, OECD Pillar Two) and evolving interpretations can impact the effective tax rate, tax liabilities, and compliance costs.

Geopolitical & External Risks

• Geopolitical Exposure: Global operations are exposed to political, economic, and social instability, conflicts, and trade restrictions, which can disrupt production, distribution, and increase costs.
• Climate Change and Natural Disasters: Extreme weather conditions and natural disasters can disrupt operations, supply chains, and impact raw material availability and costs.
• Public Health Crises: Future outbreaks of infectious diseases could lead to reduced consumer spending, store closures, supply chain disruptions, and workforce shortages.

Innovation & Technology Leadership

Research & Development Focus: Levi Strauss & Co. is committed to innovation, focusing on developing innovative and stylish products and continuously updating its core offerings. The company invests in technology, data science, and artificial intelligence initiatives to enhance its consumer, digital, and omni-channel shopping experiences. Key areas include product design and development, as evidenced by the launch of the Levi’s® Blue Tab™ collection in February 2025, which features elevated designs and Japanese denim.

Intellectual Property Portfolio: The company maintains a robust intellectual property portfolio, which it considers one of its most valuable assets.

• Patent Strategy: As of November 30, 2025, the company held 87 issued U.S. patents, 17 issued foreign patents, and had 16 U.S. patent applications and 11 international/foreign patent applications pending. Patents expire between 2026 and 2044. The company continually assesses new intellectual property for patentability.
• Trademark Strategy: Levi Strauss & Co. has over 5,100 trademark registrations and pending applications across approximately 190 jurisdictions worldwide. Core trademarks include Levi's®, Beyond Yoga®, 501®, the Arcuate Stitching Design, the Tab Device, the Two Horse® Design, and the Housemark. The company actively enforces its trademark rights through market reviews, collaboration with law enforcement, cease-and-desist letters, and litigation, currently pursuing approximately 370 infringement matters globally.
• Licensing Programs: The company licenses its trademarks to third parties for the manufacturing, marketing, and distribution of various products, ensuring adherence to product quality and manufacturing standards through comprehensive agreements.

Technology Partnerships: While specific technology partnerships are not detailed, the company relies on third-party service providers for various functions, including information technology, e-commerce operations, and data processing, indicating strategic collaborations to support its digital and operational infrastructure.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company acknowledges that leadership transitions and restructuring can be challenging to manage and may disrupt business operations. It emphasizes the importance of successfully transitioning and assimilating key employees.

Board Composition: The Audit Committee of the Board of Directors is primarily responsible for the oversight of risks from cybersecurity threats, including reviewing and discussing IT use and protection, data governance, privacy, and compliance with management. The full Board of Directors retains responsibility for overall risk management and receives periodic reports on cybersecurity risk. The company's dual class common stock structure concentrates voting control with descendants of the family of Levi Strauss.

Human Capital Strategy

Workforce Composition (as of November 30, 2025):

• Total Employees: Approximately 19,000 people.
• Geographic Distribution: Americas (approximately 9,900 employees), Europe (approximately 3,900 employees), and Asia (approximately 5,200 employees).
• Skill Mix: Approximately 900 employees in manufacturing and procurement, 11,300 in retail (including seasonal), 1,500 in distribution, and 5,300 in other non-production roles.
• Unionized Workforce: Approximately 4,100 employees are represented by a labor union or covered by a collective bargaining agreement.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The company aims to cultivate industry-leading talent and empower its teams.
• Retention Metrics: Not explicitly detailed, but the company focuses on fostering a collaborative and inclusive culture where employees feel valued and can contribute fully.
• Employee Value Proposition: Benefits include health and wellness, paid time off, parental leave (expanded in 2023 to provide 12 weeks of paid leave for pregnancy to U.S. and Canada-based employees), employee assistance, competitive pay, career growth opportunities, paid volunteer time, product discounts, and a culture of recognition.

Diversity & Development:

• Diversity Metrics: The company strives to create a workplace that reflects its consumers and communities. Internal analyses conducted in 2023 and 2024 found compensation parity across gender globally and ethnicity in the U.S. non-union population after remediation for outliers.
• Development Programs: Not explicitly detailed, but the "One Team" approach emphasizes harnessing talent, culture, and values as competitive advantages.
• Culture & Engagement: The company believes its corporate culture is a key driver of success, fostering an inclusive environment where everyone feels valued and heard.

Environmental & Social Impact

Environmental Commitments: Levi Strauss & Co. is committed to a holistic sustainability strategy, aiming to be a leader in transparency and impact, accelerate the circular economy, and inspire an inclusive and regenerative industry. Climate Strategy:

• The company's climate pillar addresses environmental impacts, including climate action, water stewardship, and biodiversity.
• Emissions Targets: Not explicitly stated in the provided text.
• Carbon Neutrality: Not explicitly stated.
• Renewable Energy: Not explicitly stated.

Supply Chain Sustainability:

• Supplier Engagement: Third-party vendors, including licensees and subcontractors, are required to contribute to sustainability goals and comply with the company's supplier code of conduct, which covers environmental matters such as wastewater treatment and solid waste disposal.
• Responsible Sourcing: The consumption pillar of the sustainability strategy focuses on circular economy, resale and upcycling initiatives, use of more sustainable fibers, safer chemicals, and waste and plastic reduction.

Social Impact Initiatives:

• Community Investment: The community pillar encompasses social and societal impacts, including diversity and inclusion, employee support and development, supply chain transparency, and investing in communities through advocacy and volunteering.
• Product Impact: The Beyond Yoga® brand promotes body positivity and inclusivity, celebrating all body shapes and sizes.
• Corporate Citizenship: The company has a long history of responsible business practices, including integrating factories prior to the Civil Rights Act of 1964, developing a comprehensive supplier code of conduct, offering benefits to same-sex partners in the 1990s, and expanding paid family leave benefits. The company also makes donations to the Levi Strauss Foundation, an independent non-profit entity ($5.7 million in FY2025).

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The company typically achieves its largest quarterly revenues in the fourth quarter, which represented 28% of total net revenues in fiscal year 2025.
• Black Friday: A significant portion of DTC channel revenues is typically generated on Black Friday. Fiscal years 2025 and 2024 each included one Black Friday.
• Economic Sensitivity: The business is impacted by discretionary consumer spending, and declines in economic conditions can lead to reduced demand.
• Industry Cycles: The global apparel industry is subject to broader economic conditions and cycles, which can cause fluctuations in quarterly operating results.

Planning & Forecasting: The level of working capital varies throughout the year to support seasonal and holiday revenue patterns and business trends. The company's success depends on its ability to accurately forecast and respond in a timely manner to consumer demand and market conditions.

Regulatory Environment & Compliance

Regulatory Framework: Levi Strauss & Co. operates globally and is subject to a complex array of federal, state, local, and foreign laws, rules, and regulations. These include laws related to labor, employment, worker health and safety, antitrust and competition, environmental protection, consumer protection, data privacy and security, anti-corruption, trade, customs, and tax requirements. Compliance with these regulations has not had, and is not currently expected to have, a material effect on capital expenditures, results of operations, or competitive position.

Trade & Export Controls:

• Import Operations: Substantially all import operations are subject to complex trade and customs laws, regulations, and tax requirements, including restrictions under applicable sanctions laws and export controls (e.g., U.S. Department of the Treasury’s Office of Foreign Assets Control).
• Tariffs and Trade Restrictions: The countries where products are manufactured or imported may impose additional duties, tariffs, or other trade restrictions. Changes in U.S. or international trade policies, including retaliatory tariffs, can increase costs for imported materials and finished goods, potentially impacting demand and results of operations.

Legal Proceedings: In the ordinary course of business, the company is involved in various claims, complaints, and pending cases, including contractual, facility and employee-related, distribution, product liability, intellectual property, bankruptcy preference, and tax and administrative matters. The company does not believe any of these pending legal proceedings will have a material impact on its financial condition, results of operations, or cash flows. The company also has pending audit assessments related to customs duties, for which recorded liabilities are not material.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective income tax rate was 20.8% for fiscal year 2025, compared to 3.3% in fiscal year 2024 and 5.9% in fiscal year 2023. The increase in fiscal year 2025 was primarily due to prior year tax benefits from an international intellectual property transaction and favorable resolutions of state audits, coupled with a lower earnings before taxes base in fiscal year 2024.
• Geographic Tax Planning: A substantial portion of the company's income is earned in foreign countries. The company reevaluated its indefinite reinvestment assertion following the Tax Cuts and Jobs Act, and most undistributed foreign earnings are no longer considered indefinitely reinvested, with a deferred tax liability of $10.8 million related to future remittance costs. Indefinite reinvestment was asserted for a portion of foreign earnings generated from fiscal years 2019 to 2025.
• Tax Reform Impact: The U.S. One Big Beautiful Bill Act (OBBBA), enacted in July 2025, did not have a material impact on the consolidated financial statements for fiscal year 2025. The company continues to evaluate its full impact. The OECD Pillar Two Inclusive Framework, which aims to implement a minimum 15% tax rate on multinational enterprises, could adversely impact the company's effective tax rate, tax liabilities, and cash tax in future years, starting in 2026.
• Tax Rulings: The company utilizes tax rulings and other agreements to achieve certainty in the treatment of certain tax matters.

Insurance & Risk Transfer

Risk Management Framework: Levi Strauss & Co. manages its investment and credit availability risks by maintaining cash and cash equivalents in diversified institutions and emphasizing preservation of principal and liquidity in its investment policy. The company also has access to a Credit Facility with multiple financial institutions to mitigate credit availability risk.

• Insurance Coverage: The company carries insurance policies to cover claim exposures exceeding predefined amounts for various loss exposures, including workers' compensation and employee/retiree medical health benefits. It also maintains insurance that provides protection against certain potential losses arising from cybersecurity incidents.
• Risk Transfer Mechanisms: To manage foreign currency risks arising from global operations, the company uses a centralized currency management operation and may enter into derivative financial instruments, such as forward exchange contracts, to hedge forecasted transactions and firm commitments. A portion of its Euro-denominated debt is designated as a net investment hedge for its European subsidiaries. The company monitors foreign exchange risk and related derivatives using market value, sensitivity analysis, and a value-at-risk model.