Stock Analysis & Valuation Levi Strauss & Co (LV2B.DE)

• Previous Close: €18.70
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula	4.90	-74

Strategic Investment Analysis

Company Overview

Levi Strauss & Co. (XETRA: LV2B.DE) is a global leader in the apparel retail sector, renowned for its iconic Levi's brand, alongside Dockers, Signature by Levi Strauss & Co., and Denizen. Headquartered in San Francisco, California, the company designs, markets, and sells a diverse range of apparel, including jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear, and accessories for men, women, and children. With operations spanning the Americas, Europe, and Asia, Levi Strauss & Co. sells its products in over 110 countries, leveraging a mix of direct sales, third-party retailers, and licensing agreements. The company's strong brand equity, supported by trademarks like the Arcuate Stitching Design and the 501 jeans, positions it as a key player in the consumer cyclical sector. Levi Strauss & Co. continues to innovate in sustainable fashion, catering to evolving consumer preferences while maintaining its heritage.

Investment Summary

Levi Strauss & Co. presents a compelling investment case with its strong brand recognition, global footprint, and diversified product portfolio. The company reported revenue of €6.36 billion and net income of €210.6 million for the fiscal year ending December 2024, with diluted EPS of €0.52. Operating cash flow stood at €898.4 million, reflecting robust operational efficiency. However, investors should note the company's total debt of €2.21 billion, which could pose risks in a rising interest rate environment. The dividend yield, with a payout of €0.44 per share, adds to its attractiveness for income-focused investors. Levi's ability to adapt to fashion trends and expand in emerging markets will be critical for sustained growth.

Competitive Analysis

Levi Strauss & Co. holds a competitive edge through its iconic brand heritage and global distribution network. The Levi's brand, synonymous with denim, enjoys strong customer loyalty and premium pricing power. The company's diversified product range across multiple brands (Levi's, Dockers, Denizen) allows it to cater to various consumer segments. Its licensing strategy further extends its market reach without significant capital expenditure. However, the apparel retail sector is highly competitive, with fast-fashion brands and e-commerce players disrupting traditional retail models. Levi's must continue investing in digital transformation and sustainability to maintain its market position. The company's focus on direct-to-consumer (DTC) channels, including e-commerce and owned stores, provides higher margins and better control over brand presentation compared to wholesale-dependent competitors. Challenges include fluctuating cotton prices and geopolitical risks affecting supply chains.

Major Competitors

• V.F. Corporation (VFC): V.F. Corporation owns a portfolio of brands, including The North Face, Vans, and Timberland, competing with Levi's in casual apparel and footwear. V.F. has a strong outdoor and activewear focus, which differentiates it from Levi's denim-centric portfolio. However, V.F. has faced challenges with declining revenue and operational inefficiencies, making Levi's a more stable investment in the apparel sector.
• PVH Corp. (PVH): PVH Corp. owns Calvin Klein and Tommy Hilfiger, competing in premium apparel. While PVH has a strong presence in formal and lifestyle wear, it lacks Levi's dominance in denim. PVH's global licensing deals are similar to Levi's strategy, but its reliance on department stores exposes it to retail sector volatility.
• Guess?, Inc. (GES): Guess? operates in the denim and casual apparel market, directly competing with Levi's. Guess? has a strong European presence but lacks Levi's brand heritage and scale. Its younger, fashion-forward positioning appeals to a niche audience, whereas Levi's has broader demographic appeal.
• The INDOOR Group (INDV.AS): The INDOOR Group focuses on denim and casualwear, competing with Levi's in Europe. While it has a strong regional presence, it lacks Levi's global reach and brand recognition. Its smaller scale limits its ability to compete on pricing and innovation.
• Zalando SE (ZAL.DE): Zalando is a leading European e-commerce platform for fashion, competing indirectly with Levi's DTC channels. Zalando's strength lies in its vast online marketplace, but it lacks proprietary brands, making it a partner rather than a direct competitor. Levi's benefits from Zalando's platform for additional distribution.