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What changed in LEVI STRAUSS & CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LEVI STRAUSS & CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+503 added−469 removedSource: 10-K (2024-01-25) vs 10-K (2023-01-25)

Top changes in LEVI STRAUSS & CO's 2023 10-K

503 paragraphs added · 469 removed · 385 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

69 edited+11 added−12 removed62 unchanged
Biggest changePrincipal competitive factors include: • anticipating and responding to changing consumer preferences and buying trends in a timely manner, and ensuring product availability at wholesale and DTC channels; • developing high-quality, innovative products with relevant designs, fits, finishes, fabrics, style and performance features that meet consumer desires and trends; • maintaining favorable and strong brand name recognition and appeal through strong and effective marketing support and consumer intelligence in diverse market segments; • identifying and securing desirable new retail locations and presenting products effectively at company-operated retail and franchised and other brand-dedicated stores; • ensuring high-profile product placement at retailers; • anticipating and responding to consumer expectations regarding e-commerce shopping and shipping; • optimizing supply chain cost efficiencies and product development cycle lead times; • creating products at a range of price points that appeal to the consumers of both our wholesale customers and our dedicated retail stores and e-commerce sites situated in each of our geographic regions; and • generating competitive economics for wholesale customers, including retailers, franchisees, and licensees.
Biggest changePrincipal competitive factors include: • anticipating and responding to changing consumer preferences and buying trends in a timely manner, and ensuring product availability at wholesale and DTC channels; • developing high-quality, innovative products with relevant designs, fits, finishes, fabrics, style and performance features that meet consumer desires and trends; • maintaining favorable and strong brand name recognition, loyalty and appeal through strong and effective marketing support and consumer intelligence in diverse market segments; • identifying and securing desirable new retail locations and presenting products effectively at company-operated retail and franchised and other brand-dedicated stores; • ensuring high-profile product placement at retailers; • anticipating and responding to consumer expectations regarding e-commerce shopping and shipping; • optimizing supply chain cost efficiencies and product development cycle lead times; • withstanding prolonged periods of adverse economic conditions or business disruptions; • adapting to changes in technology, including the successful utilization of data analytics, artificial intelligence and machine learning; • sourcing sustainable and traceable raw materials at cost-effective prices; • recruiting and retaining employees to operate our retail stores, distribution centers and various corporate functions; • protecting our intellectual property; • providing attractive, reliable, secure and user-friendly digital commerce sites; • creating products at a range of price points that appeal to the consumers of both our wholesale customers and our dedicated retail stores and e-commerce sites situated in each of our geographic regions; and • generating competitive economics for wholesale customers, including retailers, franchisees, and licensees.
We believe these actions will strengthen loyalty with our existing fans while also creating new lifelong ones. • DTC First : We believe our direct-to-consumer ("DTC") channels allow us to showcase the fullest expression of our brands and drive category diversification while also enhancing connections with the consumer.
We believe these actions will strengthen loyalty with our existing fans while also creating new lifelong ones. • DTC First : We believe our direct-to-consumer (“DTC”) channels allow us to showcase the fullest expression of our brands and drive category diversification while also enhancing connections with the consumer.
We continually strengthen our portfolio of brands and our positioning at the center of popular culture with a diverse mix of marketing initiatives to drive consumer demand, such as through social media and digital and mobile outlets, sponsorships, product placement in leading fashion magazines and with celebrities, television and radio advertisements, personal sponsorships and endorsements, and selective collaborations with key influencers, integrating ourselves with significant cultural events, and on-the-ground efforts such as street-level events and similar targeted "viral" marketing activities.
We continually strengthen our portfolio of brands and our positioning at the center of popular culture with a diverse mix of marketing initiatives to drive consumer demand, such as through social media and digital and mobile outlets, sponsorships, product placement in leading fashion magazines and with celebrities, television and radio advertisements, personal sponsorships and endorsements, and selective collaborations with key influencers, integrating ourselves with significant cultural events, and on-the-ground efforts such as street-level events and similar targeted “viral” marketing activities.
We work vigorously to enforce and protect our trademark rights by engaging in regular market reviews, helping local law enforcement authorities detect and prosecute counterfeiters, issuing cease-and-desist letters against third parties infringing or denigrating our trademarks, opposing registration of infringing trademarks, and initiating litigation as necessary. We are currently pursuing over 350 infringement matters around the world.
We work vigorously to enforce and protect our trademark rights by engaging in regular market reviews, helping local law enforcement authorities detect and prosecute counterfeiters, issuing cease-and-desist letters against third parties infringing or denigrating our trademarks, opposing registration of infringing trademarks, and initiating litigation as necessary. We are currently pursuing nearly 350 infringement matters around the world.
For more information on our calculation of Adjusted EBIT margin and Adjusted net income, see “Item 7 – Management’s Discussion and Analysis – Non-GAAP Financial Measures.” Our Brands and Products We offer a broad range of products including jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets, footwear and related accessories.
For more information on our calculation of Adjusted EBIT margin and Adjusted net income, see “Item 7 – Management’s Discussion and Analysis – Non-GAAP Financial Measures.” 7 Table of Contents Our Brands and Products We offer a broad range of products including jeans, casual and dress pants, activewear, tops, shorts, skirts, dresses, jackets, footwear and related accessories.
Our benefits are designed to help employees and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives. These benefits include health and wellness, paid time off, employee assistance, competitive pay, career growth opportunities, paid volunteer time, product discounts, and a culture of recognition.
Our benefits are designed to help employees and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives. These benefits include health and wellness, paid time off, parental leave, employee assistance, competitive pay, career growth opportunities, paid volunteer time, product discounts, and a culture of recognition.
Women's products generated 33%, 33% and 34% of our net revenues in fiscal years 2022, 2021 and 2020, respectively. The remainder of our products are non-gendered. Products other than denim bottoms – which include tops, footwear and accessories and pants excluding jeans – represented 38%, 37%, and 39% of our net revenues in fiscal years 2022, 2021 and 2020, respectively.
Women's products generated 34%, 33% and 33% of our net revenues in fiscal years 2023, 2022 and 2021, respectively. The remainder of our products are non-gendered. Products other than denim bottoms – which include tops, footwear and accessories and pants excluding jeans – represented 39%, 38%, and 37% of our net revenues in fiscal years 2023, 2022 and 2021, respectively.
Sales of Red Tab™ products represented the majority of our Levi's ® brand net revenues globally in fiscal years 2022, 2021 and 2020. We offer premium products around the world under the Levi's ® brand, including a range of premium pants, tops, shorts, skirts, jackets, footwear, and related accessories.
Sales of Red Tab™ products represented the majority of our Levi's ® brand net revenues globally in fiscal years 2023, 2022 and 2021. We offer premium products around the world under the Levi's ® brand, including a range of premium pants, tops, shorts, skirts, jackets, footwear, and related accessories.
Licensing accounted for 1%, 2% and 2% of our total net revenues in fiscal years 2022, 2021 and 2020, respectively. We enter into licensing agreements with our licensees covering royalty payments, product design and manufacturing standards, marketing and sale of licensed products, and protection of our trademarks.
Licensing accounted for 1%, 1% and 2% of our total net revenues in fiscal years 2023, 2022 and 2021, respectively. We enter into licensing agreements with our licensees covering royalty payments, product design and manufacturing standards, marketing and sale of licensed products, and protection of our trademarks.
We invented the blue jean 20 years later. In 1873, we received a U.S. patent for “waist overalls” with metal rivets at points of strain. The first product line designated by the lot number "501" was created in 1890.
We invented the blue jean 20 years later. In 1873, we received a U.S. patent for “waist overalls” with metal rivets at points of strain. The first product line designated by the lot number “501” was created in 1890.
Securities and Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Securities and Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In 2022, our Levi’s mobile app continued to achieve increased engagement with monthly active users up throughout the year and we deepened our direct, personalized relationships with our consumers through the expansion of our global loyalty programs.
In 2023, our Levi’s mobile app continued to achieve increased engagement with monthly active users up throughout the year and we deepened our direct, personalized relationships with our consumers through the expansion of our global loyalty programs.
In certain locations around the globe, we have consolidated our distribution centers to service multiple countries. 11 Table of Contents Competition The global apparel industry is highly competitive and fragmented. It is characterized by low barriers to entry, brands targeted at specific consumer segments, many regional and local competitors, and an increasing number of global competitors.
In certain locations around the globe, we have consolidated our distribution centers to service multiple countries. Competition The global apparel industry is highly competitive and fragmented. It is characterized by low barriers to entry, brands targeted at specific consumer segments, many regional and local competitors, and an increasing number of global competitors.
By the 1960s, they had become a symbol of American culture, representing a unique blend of history and youth. We opened our export and international businesses in the 1950s and 1960s, respectively. The Dockers ® brand helped drive "Casual Friday" in the 1990s and has been a cornerstone of casual menswear for more than 30 years.
By the 1960s, they had become a symbol of American culture, representing a unique blend of history and youth. We opened our export and international businesses in the 1950s and 1960s, respectively. The Dockers ® brand helped drive “Casual Friday” in the 1990s and has been a cornerstone of casual menswear for more than 30 years.
Our Levi's ® brand products accounted for 87% of our net revenues in each of the fiscal years 2022, 2021 and 2020, respectively, approximately half of which were generated in our Americas segment in each of these years.
Our Levi's ® brand products accounted for 87% of our net revenues in each of the fiscal years 2023, 2022 and 2021, respectively, approximately half of which were generated in our Americas segment in each of these years.
Licensing The appeal of our brands across consumer groups and our global reach enable us to license our Levi's ® and Dockers ® trademarks for a variety of product categories in multiple markets globally, including footwear, belts, wallets, bags, outerwear, 8 Table of Contents sweaters, dress shirts, kidswear, sleepwear and hosiery.
Licensing The appeal of our brands across consumer groups and our global reach enable us to license our Levi's ® and Dockers ® trademarks for a variety of product categories in multiple markets globally, including footwear, belts, wallets, bags, outerwear, sweaters, dress shirts, kidswear, sleepwear and hosiery.
In addition to the dedicated stores, we maintain brand-dedicated e-commerce sites that sell products directly to consumers. Company-operated brick-and-mortar retail stores . Our company-operated retail stores, comprising both mainline and outlet stores, generated 26%, 25% and 26% of our net revenues in fiscal years 2022, 2021 and 2020, respectively.
In addition to the dedicated stores, we maintain brand-dedicated e-commerce sites that sell products directly to consumers. Company-operated brick-and-mortar retail stores . Our company-operated retail stores, comprising both mainline and outlet stores, generated 29%, 26% and 25% of our net revenues in fiscal years 2023, 2022 and 2021, respectively.
Our presence in more than 110 countries enables us to leverage our global scale for product development and sourcing while using our local expertise to tailor products and retail experiences to individual markets. 10 Table of Contents Product procurement . We source nearly all of our products through independent contract manufacturers.
Our presence in more than 110 countries enables us to leverage our global scale for product development and sourcing while using our local expertise to tailor products and retail experiences to individual markets. Product procurement . We source nearly all of our products through independent contract manufacturers.
We offer denim jeans, casual pants, tops and jackets in a variety of fits, fabrics and finishes for men, women and children under the Signature by Levi Strauss & Co.™ brand through the mass retail channel primarily in the United States and Canada.
We offer denim jeans, casual pants, tops and jackets in a variety of fits, fabrics and finishes for men, women and children under the Signature by Levi Strauss & Co.™ brand through the mass retail channel primarily in the United States and Canada. The Signature by Levi Strauss & Co.™ was introduced in 2003.
We also have 38 international and foreign patent applications pending. We will continually assess the ability to patent new intellectual property as we develop technologies that we believe are innovative, such as our F.L.X. technology. History and Corporate Citizenship Our story began in San Francisco, California in 1853 as a wholesale dry goods business.
We also had 29 international and foreign patent applications pending. We will continually assess the ability to patent new intellectual property as we develop technologies that we believe are innovative, such as our F.L.X. technology. History and Corporate Citizenship Our story began in San Francisco, California in 1853 as a wholesale dry goods business.
The line includes the iconic 501 ® jean, the original and best-selling five-pocket jean of all time. In 2023, we will celebrate the 150 th anniversary of the 501 ® jean. The line also incorporates a full range of jeanswear fits and styles designed specifically for women.
The line includes the iconic 501 ® jean, the original and best-selling five-pocket jean of all time. In 2023, we celebrated the 150 th anniversary of the 501 ® jean. The line also incorporates a full range of jeanswear fits and styles designed specifically for women.
Dedicated Stores and E-commerce Sites We believe retail stores dedicated to our brands are important for the growth, visibility, availability and commercial success of our brands, and they are an increasingly important part of our "DTC First" strategy. Our brand-dedicated stores are either operated by us or by independent third parties such as franchisees.
Dedicated Stores and E-commerce Sites We believe retail stores dedicated to our brands are important for the growth, visibility, availability and commercial success of our brands, and they are an increasingly important part of our “DTC First” strategy. Our brand-dedicated stores are either operated by us or by independent third parties such as franchisees.
The salespeople involved in these transactions are generally our employees and not those of the retailer. We recognize revenue in the amount of the sale to the end consumer, while paying our partners a commission. We operated approximately 550 of these shop-in-shops as of November 27, 2022.
The salespeople involved in these transactions are generally our employees and not those of the retailer. We recognize revenue in the amount of the sale to the end consumer, while paying our partners a commission. We operated approximately 550 of these shop-in-shops as of November 26, 2023.
Our Signature by Levi Strauss & Co.™ and Denizen ® brand products collectively accounted for 6%, 8% and 8% of our net revenues in fiscal years 2022, 2021 and 2020, respectively.
Our Signature by Levi Strauss & Co.™ and Denizen ® brand products collectively accounted for 5%, 6% and 8% of our net revenues in fiscal years 2023, 2022 and 2021, respectively.
Sales to our top ten wholesale customers totaled 31%, 32% and 29% of our net revenues in fiscal years 2022, 2021, and 2020, respectively. No single customer represented 10% or more of our net revenues in any of these years.
Sales to our top ten wholesale customers totaled 28%, 31% and 32% of our net revenues in fiscal years 2023, 2022, and 2021, respectively. No single customer represented 10% or more of our net revenues in any of these years.
Our Dockers ® brand products accounted for 5% of our net revenues in each of the fiscal years 2022, 2021 and 2020, respectively, and are sold in more than 50 countries. Beyond Yoga ® Brand Our Beyond Yoga ® brand is a body positive, premium athleisure apparel brand focused on quality, fit and comfort for all shapes and sizes.
Our Dockers ® brand products accounted for 5% of our net revenues in each of the fiscal years 2023, 2022 and 2021 and are sold in more than 50 countries. 8 Table of Contents Beyond Yoga ® Brand Our Beyond Yoga ® brand is a body positive, premium athleisure apparel brand focused on quality, fit and comfort for all shapes and sizes.
Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 26%, 25% and 26% of our total units sold in fiscal years 7 Table of Contents 2022, 2021 and 2020, respectively. The remainder of our products are footwear and accessories. Men's products generated 65%, 65% and 64% of our net revenues in fiscal years 2022, 2021 and 2020, respectively.
Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 26%, 26% and 25% of our total units sold in fiscal years 2023, 2022 and 2021, respectively. The remainder of our products are footwear and accessories. Men's products generated 64%, 65% and 65% of our net revenues in fiscal years 2023, 2022 and 2021, respectively.
Although our brands are recognized as authentically "American," we derived over half of our net revenues from outside the United States in fiscal year 2022. Our products are sold in approximately 50,000 retail locations worldwide, including approximately 3,200 brand-dedicated stores and shop-in-shops.
Although our brands are recognized as authentically “American”, we derived over half of our net revenues from outside the United States in fiscal year 2023. Our products are sold in over 45,000 retail locations worldwide, including approximately 3,200 brand-dedicated stores and shop-in-shops.
Due to the timing of our fiscal year end, a particular fiscal year might include one, two or no Black Fridays, which could impact our net revenues for the fiscal year. Fiscal years 2022 and 2021 included one Black Friday, while fiscal year 2020 had two Black Fridays.
Due to the timing of our fiscal year end, a particular fiscal year might include one, two or no Black Fridays, which could impact our net revenues for the fiscal year. Fiscal years 2023, 2022 and 2021 each included one Black Friday.
Across all of our brands, pants – including jeans, casual pants, dress pants and activewear – represented 67%, 67% and 65% of our total units sold in fiscal years 2022, 2021 and 2020, respectively.
Across all of our brands, pants – including jeans, casual pants, dress pants and activewear – represented 68%, 67% and 67% of our total units sold in fiscal years 2023, 2022 and 2021, respectively.
Our ability to deliver our long term goals assumes no significant worsening of inflationary pressures, supply chain disruptions, foreign currency impacts and the COVID-19 pandemic. If any of these impacts change significantly, the timing of when we achieve our long term goals will be affected.
Our ability to deliver our long term goals assumes no significant worsening of inflationary pressures, supply chain disruptions, foreign currency impacts and the impact of geopolitical conflict. If any of these impacts change significantly, the timing of when we achieve our long term goals will be affected.
During 2022, we added 142 company-operated stores and closed 136 stores. Franchised and other stores . Franchised, licensed, or other forms of brand-dedicated stores operated by independent third parties sell Levi's ® and Dockers ® products in markets outside the United States.
During 2023, we added 152 company-operated stores and closed 69 stores. Franchised and other stores . Franchised, licensed, or other forms of brand-dedicated stores operated by independent third parties sell Levi's ® and Dockers ® products in markets outside the United States.
There were approximately 1,200 of these stores as of November 27, 2022, and they are a key element of our international distribution.
There were approximately 1,200 of these stores as of November 26, 2023, and they are a key element of our international distribution.
Each fiscal year generally consists of four 13-week quarters, with each quarter ending on the Sunday that is closest to the last day of the month of that quarter. Fiscal years 2022 and 2021 were 52-week years, ending on November 27, 2022 and November 28, 2021, respectively, and fiscal year 2020 was a 53-week year, ending on November 29, 2020.
Each fiscal year generally consists of four 13-week quarters, with each quarter ending on the Sunday that is closest to the last day of the month of that quarter. Fiscal years 2023, 2022 and 2021 were 52-week years, ending on November 26, 2023, November 27, 2022 and November 28, 2021, respectively.
The price and availability of cotton may fluctuate substantially, depending on a variety of factors, including the effects of inflation. Current price fluctuations impact the cost of our products in future seasons due to the lead time of our product development cycle.
The price and availability of cotton may fluctuate substantially, depending on a variety of factors, including the effects of inflation. Current price fluctuations impact the cost of our products in future seasons due to the lead time of our product development cycle. Fluctuations in product costs can cause a decrease in our profitability. Sourcing locations .
Effects of Inflation Inflationary pressures negatively impacted our net revenues, operating margins and net income in fiscal 2022. This includes increased costs of labor, products and freight and beginning in July 2022, a slowdown in consumer demand for our products.
Effects of Inflation Inflationary pressures negatively impacted our net revenues, operating margins and net income in fiscal years 2022 and 2023, including increased costs of labor, products, and beginning in July 2022, a slowdown in consumer demand for our products.
We engage in a "profits through principles" business approach and constantly strive to set higher standards for ourselves and the industry.
We engage in a “profits through principles” business approach and constantly strive to set higher standards for ourselves and the industry.
Distribution center activities include receiving finished goods from our contract manufacturers and plants, inspecting those products, preparing them for retail presentation, and shipping them to our customers, our e-commerce consumers, and to our own stores. Our distribution centers maintain a combination of replenishment and seasonal inventory.
For more information, see “Item 2 – Properties”. 11 Table of Contents Distribution center activities include receiving finished goods from our contract manufacturers and plants, inspecting those products, preparing them for retail presentation, and shipping them to our customers, our e-commerce consumers, and to our own stores. Our distribution centers maintain a combination of replenishment and seasonal inventory.
In addition to these stores, we consider our network of brand-dedicated shop-in-shops, which are located within department stores and may be either operated directly by us or third parties, to be an important component of our retail distribution in international markets. Outside the United States, approximately 140 of these shop-in-shops were operated by third parties as of November 27, 2022.
In addition to these stores, we consider our network of brand-dedicated shop-in-shops, which are located within department stores and may be either operated directly by us or third parties, to be an important component of our retail distribution in international markets.
Our milestone initiatives over the years include: integrating our factories prior to the enactment of the Civil Rights Act of 1964; developing a comprehensive supplier code of conduct that requires safe and healthy working conditions before such codes of conduct became commonplace among multinational apparel companies; offering benefits to same-sex partners in the 1990s, long before most other companies; offering up to eight weeks of paid family leave to help ease the strain on U.S.-based employees caring for an immediate family member with a serious medical condition in 2020; and in 2023, expanding pregnancy leave benefits to provide 12 weeks of paid leave to both U.S. and Canada-based employees.
Our milestone initiatives over the years include: integrating our factories prior to the enactment of the Civil Rights Act of 1964; developing a comprehensive supplier code of conduct that requires safe and healthy working conditions before such codes of conduct became commonplace among multinational apparel companies; offering benefits to same-sex partners in the 1990s, long before most other companies; offering up to eight weeks of paid family leave to help ease the strain on U.S.-based employees caring for an immediate family member with a serious medical condition in 2020; and in 2023, expanding pregnancy leave benefits to provide 12 weeks of paid leave to both U.S. and Canada-based employees. 13 Table of Contents Environmental, Social and Governance and Human Capital Environmental, Social and Governance To advance our progress on environmental, social and governance (“ESG”) initiatives and ensure we meet stakeholder expectations for ESG commitments and performance, we hold ourselves accountable to a holistic sustainability strategy.
Each quarter of fiscal years 2022, 2021 and 2020 consisted of 13 weeks, with the exception of the fourth quarter of 2020, which consisted of 14 weeks. The level of our working capital reflects the seasonality of our business and varies throughout the year to support our seasonal and holiday revenue patterns as well as business trends.
Each quarter of fiscal years 2023, 2022 and 2021 consisted of 13 weeks. The fourth quarter of 2024 will consist of 14 weeks and end on December 1, 2024. The level of our working capital reflects the seasonality of our business and varies throughout the year to support our seasonal and holiday revenue patterns as well as business trends.
We conduct assessments of political, social, environmental, economic, trade, labor and intellectual property protection conditions in the countries in which we source our products before placing production in those countries and on an ongoing basis.
We use numerous independent contract manufacturers located throughout the world for the production and finishing of our garments. We conduct assessments of political, social, environmental, economic, trade, labor and intellectual property protection conditions in the countries in which we source our products before placing production in those countries and on an ongoing basis.
We also work with trade groups and industry participants seeking to strengthen laws relating to the protection of intellectual property rights in markets around the world. 12 Table of Contents As of November 27, 2022, we had 43 issued U.S. patents, seven issued foreign patents and 46 U.S. patent applications pending. Our patents expire between 2025 and 2040.
We also work with trade groups and industry participants seeking to strengthen laws relating to the protection of intellectual property rights in markets around the world. As of November 26, 2023, we had 65 issued U.S. patents, 15 issued foreign patents and 48 U.S. patent applications pending. Our patents expire between 2025 and 2042.
Our climate pillar encompasses environmental impacts, including climate action, water stewardship and biodiversity; our consumption pillar encompasses circular economy, use of sustainable fibers, safer chemicals and waste reduction; and our community pillar encompasses social and societal impacts, including diversity, equity and inclusion, employee support and development, supply chain transparency, standards and improvements, using our voice, and philanthropy and volunteering.
Our climate pillar encompasses environmental impacts, including climate action, water stewardship and biodiversity; our consumption pillar encompasses circular economy, resale and upcycling initiatives, use of sustainable fibers, safer chemicals and waste and plastic reduction; and our community pillar encompasses social and societal impacts, including diversity, equity and inclusion, employee support and development, supply chain transparency, investing in our communities through advocacy and volunteering.
In 2022, we released our 2021 sustainability report, which included an updated slate of 16 goals in areas that together demonstrate the scope and ambition of our work in this space and illustrate our commitment to bettering the world we all share.
In 2023, we released our 2022 sustainability goals and progress update report, which included updates and progress against our 16 people- and planet- first goals in areas that together demonstrate the scope and ambition of our work in this space and illustrate our commitment to bettering the world we all share.
In addition to our DTC initiatives, we will also focus on our wholesale channel, partnering with customers that are focused on delivering high quality results and service to our consumers, while also elevating our Levi’s® brand. • Further Diversify our Portfolio : We plan to amplify our reach by growing share across geographies, categories, genders and channels.
In addition to our DTC initiatives, we will also focus on our wholesale channel, partnering with customers that are focused on delivering high quality results and service to our consumers, while also elevating our Levi’s ® brand. • Further Diversify our Portfolio : We plan to accelerate growth in international markets, with a focus on high-growth markets.
For more information on the potential impacts of government regulations affecting our business, see "Item 1A – Risk Factors". Intellectual Property We have more than 6,300 trademark registrations and pending applications in approximately 180 jurisdictions worldwide, and we acquire rights in new trademarks according to business needs. Substantially all of our global trademarks are owned by Levi Strauss & Co.
For more information on the potential impacts of government regulations affecting our business, see “Item 1A – Risk Factors”. 12 Table of Contents Intellectual Property We have more than 6,200 trademark registrations and pending applications in approximately 180 jurisdictions worldwide, and we acquire rights in new trademarks according to business needs.
Our commercial marketing teams adapt global tools for local relevance and execute marketing strategies within the markets where we operate. We also use our websites, including www.levi.com , www.dockers.com , and www.beyondyoga.com in relevant markets to enhance consumer understanding of our brands and help consumers find and buy our products.
We also use our websites, including www.levi.com , www.dockers.com , and www.beyondyoga.com in relevant markets to enhance consumer understanding of our brands and help consumers find and buy our products.
As of November 27, 2022, we had 1,089 company-operated stores located in 38 countries. The majority of the stores are dedicated to the Levi's ® brand, with 381 stores in the Americas, 289 stores in Europe, and 356 stores in Asia. We had 61 Dockers ® brand-dedicated stores globally and we opened two Beyond Yoga stores during the year.
As of November 26, 2023, we had 1,172 company-operated stores located in 37 countries. The majority of the stores are dedicated to the Levi's ® brand, with 412 stores in the Americas, 291 stores in Europe, and 366 stores in Asia. We had 97 Dockers ® brand-dedicated stores globally and we opened six Beyond Yoga ® stores during the year.
For more information regarding risks we face with respect to inflation, see "Item 1A – Risk Factors." Marketing and Promotion Our marketing is rooted in globally consistent brand messages that reflect the unique attributes of our brands, including the Levi's ® brand as the authentic and original jeanswear brand and Dockers ® brand as the definitive khaki.
Marketing and Promotion Our marketing is rooted in globally consistent brand messages that reflect the unique attributes of our brands, including the Levi's ® brand as the authentic and original jeanswear brand and Dockers ® brand as the definitive khaki.
Dockers ® Brand Founded in 1986, the Dockers ® brand sparked a revolution in the way millions of men dressed around the world, shifting from the standard issue suit to a more casual look. More than 30 years later, the Dockers ® brand embodies California style, bringing a full range of casual, versatile styles for men and women.
Dockers ® Brand Founded in 1986, the Dockers ® brand sparked a revolution in the way millions of men dressed around the world, shifting from the standard issue suit to a more casual look.
We regard our trademarks as one of our most valuable assets and believe they have substantial value in the marketing of our products.
Substantially all of our global trademarks are owned by Levi Strauss & Co. or its wholly-owned affiliates. We regard our trademarks as one of our most valuable assets and believe they have substantial value in the marketing of our products.
We believe there are significant market opportunities in underpenetrated parts of our business such as tops, women's and activewear. Our success will be driven not just by what we do, but how we do it.
We plan to achieve growth expectations in under-penetrated parts of our business such as tops and women's, expanding our addressable market. Our success will be driven not just by what we do, but how we do it.
As of such date, approximately 1,600 of our employees were associated with the manufacturing and procurement of our products, 9,300 worked in retail, 13 Table of Contents including seasonal employees, 2,000 worked in distribution and 5,100 were other non-production employees.
As of such date, approximately 1,600 of our employees were associated with the manufacturing and procurement of our products, 10,200 worked in retail, including seasonal employees, 2,100 worked in distribution and 5,200 were other non-production employees. As of November 26, 2023, approximately 5,300 of our employees were represented by a labor union or covered by a collective bargaining agreement.
In 2023, we will also celebrate the 150 th anniversary of the 501 ® jean. Our marketing organization includes both global and commercial marketing teams. Our global marketing team is responsible for developing a toolkit of marketing assets and brand guidelines to be applied across all marketing activities, including media, engagement, brand environment and in-store activation.
Our global marketing team is responsible for developing a toolkit of marketing assets and brand guidelines to be applied across all marketing activities, including media, engagement, brand environment and in-store activation. Our commercial marketing teams adapt global tools for local relevance and execute marketing strategies within the markets where we operate.
As a result, we plan to increase investments in our stores and expand our brick-and-mortar retail footprint, with a focus on mainline expansion. We also plan to continue rolling out and enhancing our in-store and omni-channel capabilities to further elevate the shopping experience.
This requires increased investments in our stores, expanding our brick-and-mortar retail footprint with a focus on mainline expansion, technology to win with the consumer and our people, and enhancing our in-store, ecommerce and omni-channel capabilities to further elevate the shopping experience.
These sites represented 7%, 8% and 8% of total net revenues in fiscal years 2022, 2021 and 2020, respectively; and 19%, 21% and 21% of DTC channel net revenues in fiscal years 2022, 2021 and 2020, respectively. Seasonality of Sales We typically achieve our largest quarterly revenues in the fourth quarter.
These sites represented 9%, 7% and 8% of total net revenues in fiscal years 2023, 2022 and 2021, respectively; and 20%, 19% and 21% of DTC channel net revenues in fiscal years 2023, 2022 and 2021, respectively.
In fiscal year 2022, our net revenues in the first, second, third and fourth quarters represented 26%, 24%, 24% and 26%, respectively, of our total net revenues for the year. In fiscal year 2021, our net revenues in the first, second, third and fourth quarters represented 23%, 22%, 26% and 29%, respectively, of our total net revenues for the year.
Seasonality of Sales We typically achieve our largest quarterly revenues in the fourth quarter. In fiscal year 2023, our net revenues in the first, second, third and fourth quarters represented 27%, 22%, 24% and 27%, respectively, of our total net revenues for the year.
E-commerce sites . We maintain brand-dedicated e-commerce sites, including www.levi.com , www.dockers.com and www.beyondyoga.com , that sell products directly to consumers across multiple markets around the world.
Outside the United States, approximately 120 of these shop-in-shops were operated by third parties as of November 26, 2023. 9 Table of Contents E-commerce sites . We maintain brand-dedicated e-commerce sites, including www.levi.com , www.dockers.com and www.beyondyoga.com , that sell products directly to consumers across multiple markets around the world.
This means we strive to create a workplace where everyone feels valued, empowered and welcomed to be their authentic selves. We are committed to building a workforce that better represents our consumers while ensuring that every employee feels a true sense of belonging and is as diverse as the communities we serve.
We are committed to building a workforce that better represents our consumers while ensuring that every employee feels a true sense of belonging and is as diverse as the communities we serve. This includes improving our representation in our corporate and leadership ranks, ensuring we are an inclusive culture and advocating externally in support of racial justice.
We implemented price increases on many of our products in 2022 in an effort to mitigate some of the effect of higher costs. Inflation did not have a significant impact on our results of operations in 2021 or 2020. If these inflationary pressures continue, our revenue, operating margins and net income will be impacted in 2023.
We implemented price increases on many of our products in the latter half of 2022 to mitigate the effect of higher costs. If these inflationary pressures continue, our revenue, operating margins and net income will be impacted in 2024. For more information regarding risks we face with respect to inflation, see “Item 1A – Risk Factors”.
Additionally, given the impact on our channel mix, we estimate that gross margins in the first quarter will be unfavorably impacted and gross margins in the second quarter will be favorably impacted. 9 Table of Contents We typically achieve a significant amount of revenues from our DTC channel on the Friday following Thanksgiving Day, which is commonly referred to as Black Friday.
In fiscal year 2022, our net revenues in the first, second, third and fourth quarters represented 26%, 24%, 24% and 26%, respectively, of our total net revenues for the year. We typically achieve a significant amount of revenues from our DTC channel on the Friday following Thanksgiving Day, which is commonly referred to as Black Friday.
As of November 27, 2022, approximately 4,800 of our employees were represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good. Diversity, Equity, and Inclusion. We believe in living our values: originality, empathy, integrity and courage.
We have not experienced any work stoppages, and we consider our relations with our employees to be good. Diversity, Equity, and Inclusion. We believe in living our values: originality, empathy, integrity and courage. This means we strive to create a workplace where everyone feels valued, empowered and welcomed to be their authentic selves.
This includes improving our representation in our corporate and leadership ranks, ensuring we are an inclusive culture and advocating externally in support of racial justice. In 2022, we launched our first-ever diversity, equity and inclusion ("DE&I") Impact Report. The report reflects our commitment to fully and transparently communicate our progress in making our company more diverse and inclusive.
In 2023, we launched our second annual diversity, equity and inclusion (“DE&I”) Impact Report. The report reflects our commitment to fully and transparently communicate our progress in making our company more diverse and inclusive.
The goals include targets tied to various areas across our sustainability strategy and collectively reflect our guiding philosophy of profits through principles. Our aim is to continue fortifying each pillar, to deliver meaningful progress while evolving our efforts to ensure our business becomes more sustainable.
The goals include targets tied to various areas across our sustainability strategy and collectively reflect our guiding philosophy of profits through principles. Our sustainability strategy centers on three main pillars — climate, consumption, and community.
We plan to continue elevating and strengthening all of our brands through integrating product, design, positioning, marketing and consumer experience to ensure they are highly differentiated and delivering superior consumer value.
We plan to continue elevating and strengthening all of our brands through integrating product, design, positioning, marketing and consumer experience to ensure they are the “Center of Culture”. We will drive growth in women's and tops through a sharpened focus on denim dressing and denim lifestyle, building end-to-end capability in key lifestyle apparel categories beyond jeans.
Beyond Yoga ® was founded in 2005 to promote body positivity, honoring and celebrating every body from XXS-4X. We acquired the Beyond Yoga ® brand in the fourth quarter of 2021. Our Beyond Yoga ® brand products accounted for 2% of our net revenues in fiscal year 2022.
The brand has six total stores with a majority of openings happening within 2023, including its first door outside of California located in Chicago. We acquired the Beyond Yoga ® brand in the fourth quarter of 2021. Our Beyond Yoga ® brand products accounted for 2% of our net revenues in both fiscal year 2023 and fiscal year 2022.
Human Capital Management As of November 27, 2022, we employed approximately 18,000 people, approximately 8,700 of whom were located in the Americas, 4,500 of whom were located in Europe, and 4,800 of whom were located in Asia.
Our aim is to continue fortifying each pillar, to deliver meaningful progress while evolving our efforts to ensure our business becomes more sustainable. Human Capital Management As of November 26, 2023, we employed approximately 19,100 people, approximately 9,500 of whom were located in the Americas, 4,500 of whom were located in Europe, and 5,100 of whom were located in Asia.
Due to lingering COVID-19 related lockdowns, in fiscal year 2022, we sourced apparel from independent contract manufacturers located in approximately 23 countries around the world, with no more than 25% sourced from any single country, an increase from our standard practice of sourcing less than 20% from any single country.
In fiscal year 2023, we sourced product from independent contract manufacturers located in approximately 32 countries around the world, with no more than 30% sourced from any single country, in line with our updated sourcing strategy for the post-COVID environment. We sourced products in North and South Asia, the Americas, including the United States, Europe and Africa. Sourcing practices .
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To mitigate risks associated with our April 2023 U.S. enterprise resource planning ("ERP") system implementation, we plan to accelerate wholesale shipments, typically made in the second quarter, to the first quarter of 2023.
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As a result, we plan to continue building a harmonized omni-channel marketplace where each channel reinforces the other, driving consumer engagement and increasing their satisfaction.
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As a result, we estimate that approximately $80 million to $100 million of corresponding net revenues will shift from the second quarter to the first quarter of 2023.
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Today, the Dockers ® brand continues to be the authority on khaki and offers a wide range of apparel and accessories, for men and women, with no compromises in quality – always superior comfort and versatile style.
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We launched the second iteration of our Buy Better Wear Longer campaign, designed to inspire shoppers—both young and young-at-heart—while highlighting the quality and timeless style of Levi’s. This campaign underscores the durability of Levi’s garments— a powerful trait especially in today's environment where consumers are looking for quality pieces that get better with time.
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While the brand remains focused on the classic khaki style and its founding principles, Dockers ® has evolved its offerings to include more variety and appeal to a broader set of shoppers in both their professional and personal lives. There are approximately 100 company-operated retail stores – predominately in the south of Europe and Latin America.
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Fluctuations in product costs can cause a decrease in our profitability if product pricing actions taken in response are insufficient or if those actions cause our wholesale customers or retail consumers to reduce the volumes they purchase. Sourcing locations . We use numerous independent contract manufacturers located throughout the world for the production and finishing of our garments.
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Of the 36 new stores opened in fiscal year 2023, two are in the U.S. and the remaining international.
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Our strategy is to return to our historical sourcing practice in the future once sourcing stabilizes and lingering COVID-19 impacts are resolved. We sourced products in North and South Asia, the Americas, including the United States, Europe and Africa. Sourcing practices .
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Beyond Yoga ® was founded in 2005 to promote body positivity, honoring and celebrating every body from XXS-4X. The brand produces clothing that fosters well-being in luxuriously soft, no-hassle care fabrics for styles that keep up with the toughest workouts and beyond.
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For more information, see "Item 2 – Properties." During fiscal year 2022, port congestion, inventory delays, increased and unpredictable lead times, labor shortages, and storage and process capacity pressures within our U.S. distribution centers, are impacting our ability to service consumer and wholesale customer demand, mainly within the United States.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFuture charges related to such actions may harm our profitability in the periods incurred. 22 Table of Contents Implementation of a reduction in workforce, or similar restructuring program actions, may present a number of significant risks, including: • actual or perceived disruption of service or reduction in service levels to customers and consumers; • potential adverse effects on our internal control environment and inability to preserve adequate internal controls relating to our general and administrative functions in connection with the decision to outsource certain business service activities; • actual or perceived disruption to suppliers, distribution networks and other important operational relationships and the inability to resolve potential conflicts in a timely manner; • difficulty in obtaining timely delivery of products of acceptable quality from our contract manufacturers; • diversion of management attention from ongoing business activities and strategic objectives; and • failure to maintain employee morale and retain key employees.
Biggest changeRestructuring program actions, which include a reduction in workforce, operating model redesign and core processes redesign, may present a number of significant risks that could have a material adverse effect on our operations, financial condition, results of operations, cash flow, or business reputation, including: • incurrence of additional costs in the short-term, including workforce reduction costs, training of employees or third-party resources, accounting charges for inventory and technology-related write-offs and charges relating to consolidation of excess facilities; • failure to accurately assess market opportunities and the technology required to address such opportunities; • actual or perceived disruption of service or reduction in service levels to customers and consumers; • potential adverse effects on our internal control environment and inability to preserve adequate internal controls relating to our general and administrative functions; • actual or perceived disruption to customers, suppliers, distribution networks and other important operational relationships and the inability to resolve potential conflicts in a timely manner; • difficulty in obtaining timely delivery of products of acceptable quality from our contract manufacturers; • diversion of management attention from ongoing business activities and strategic objectives; • failure to maintain employee morale and retain key employees, damage to company culture and an increase in employment claims; and • damage to our reputation as an employer, which could make it more difficult for us to hire new employees in the future.
We believe the diversity of locations in which we operate, our operational size, disaster recovery and business continuity planning and our information technology systems and networks, including the Internet and third-party services position us well, but may not be sufficient for all or for concurrent eventualities.
We believe the diversity of locations in which we operate, our operational size, disaster recovery, business continuity planning and information technology systems and networks, including the Internet and third-party services position us well, but may not be sufficient for all or for concurrent eventualities.
The price and availability of cotton may fluctuate substantially, depending on a variety of factors, including demand, acreage devoted to cotton crops and crop yields, weather, supply conditions, transportation costs, energy prices, work stoppages, government regulation, sanctions and policy, economic climates, market speculation, compliance with our working condition, environmental protection, and other standards, and other unpredictable factors.
The price and availability of cotton may fluctuate substantially, depending on a variety of factors, including demand, acreage devoted to cotton crops and crop yields, weather, supply conditions, transportation costs, energy prices, work stoppages, government regulation, sanctions and policy, economic climates, market speculation, compliance with our working condition, environmental protection, other standards and other unpredictable factors.
Many variables, such as changes in interest rates, mortality rates, health care costs, investment returns or the market value of plan assets, can affect the funded status of our defined benefit pension, other postretirement, and postemployment benefit plans and cause volatility in the net periodic benefit cost and future funding requirements of the plans.
Many variables, such as changes in interest rates, mortality rates, health care costs, investment returns or the market value of plan assets, can affect the funded status of our defined benefit pension and other postretirement, and postemployment benefit plans and cause volatility in the net periodic benefit cost and future funding requirements of the plans.
While we have policies and procedures and internal controls to address compliance with such laws, we cannot provide assurance that all of our employees and third-party intermediaries, business partners and agents will not take actions in violation of such policies and laws, for which we may be ultimately held responsible.
While we have policies and procedures and internal controls to address compliance with such laws, we cannot provide assurance that all of our employees and third-party intermediaries, business partners and agents have not and will not take actions in violation of such policies and laws, for which we may be ultimately held responsible.
The market price of our Class A common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenues or other operating results; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure; 32 Table of Contents • additional shares of Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; • changes in operating performance and stock market valuations of companies in our industry, including our vendors and competitors; • price and volume fluctuations in the overall stock market, including as a result of general economic trends, including inflationary pressures; • lawsuits threatened or filed against us, or events that negatively impact our reputation; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from the macroeconomic environment, geopolitical activities, war, incidents of terrorism, natural disasters, industrial accidents, pandemics (including the COVID-19 pandemic), or responses to these events.
The market price of our Class A common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenues or other operating results; • variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure; • additional shares of Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions; • changes in operating performance and stock market valuations of companies in our industry, including our vendors and competitors; • price and volume fluctuations in the overall stock market, including as a result of general economic trends, including inflationary pressures; • lawsuits threatened or filed against us, or events that negatively impact our reputation; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from the macroeconomic environment, geopolitical activities, war, incidents of terrorism, natural disasters, industrial accidents, pandemics (including the COVID-19 pandemic), or responses to these events.
The U.S. and foreign government bodies in jurisdictions in which we operate have announced targeted sanctions and export control measures and have threatened additional sanctions and export control measures, which have and could in the future result in, among other things, severe or complete restrictions on exports to and other commerce and business dealings involving Russia, certain regions of Ukraine, or particular entities and individuals, including in Belarus.
The U.S. and foreign government bodies in jurisdictions in which we operate have announced and threatened additional targeted sanctions and export control measures, which have resulted in and could in the future result in, among other things, severe or complete restrictions on exports to and other commerce and business dealings involving Russia, certain regions of Ukraine or particular entities and individuals, including in Belarus.
Any of these outcomes could have a material adverse effect on our business, including unwanted media attention, impairment of our consumer and customer relationships, damage to our reputation, resulting in lost sales, fines, lawsuits, government enforcement actions (for example, investigations, fines, penalties, audits and inspections) or significant legal and remediation expenses.
Any of these outcomes could have a material adverse effect on our business, including unwanted media attention, impairment of our consumer and customer relationships, damage to our reputation, resulting in lost sales, fines, lawsuits (including class actions), government enforcement actions (for example, investigations, fines, penalties, audits and inspections) or significant legal and remediation expenses.
If we cannot implement a valid compliance mechanism for cross-border privacy and security transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal information from Europe or elsewhere.
If we cannot implement a valid compliance mechanism for cross-border privacy and security transfers, we may face increased exposure to legal or regulatory actions, substantial fines and injunctions against processing or transferring personal information from Europe or elsewhere.
Increases in the price or availability of raw materials could increase our cost of goods and negatively impact our financial results. The majority of our products are made of cotton, where the remaining balance are made of synthetics, cotton/synthetic blends, and viscose.
Increases in the price or availability of raw materials could increase our cost of goods and negatively impact our financial results. The majority of our products are made of cotton, where the remaining balance are primarily made of synthetics, cotton/synthetic blends and viscose.
These actions may make our operations more vulnerable to interruptions in the event of work stoppages or disruption (including as a consequence of public health directives, quarantine policies or social distancing measures imposed by governments), labor disputes, worker shortages, pandemics (such as the COVID-19 pandemic), macroeconomic conditions, geopolitical conflict, the impacts of climate change, earthquakes, floods, fires or other natural disasters affecting these distribution centers.
These actions may make our operations more vulnerable to interruptions in the event of work stoppages or disruption (including as a consequence of public health directives, quarantine policies or social distancing measures imposed by governments), labor disputes, worker shortages, pandemics (such as the COVID-19 pandemic), macroeconomic conditions, geopolitical conflict, the impacts of climate change, earthquakes, floods, fires or other natural disasters affecting these distribution centers or shipping channels.
The failure to successfully transition and assimilate key employees could adversely affect our results of operations. To the extent we do not effectively hire, onboard, retain, and motivate key employees, our business can be harmed.
The failure to successfully transition and assimilate key employees generally could adversely affect our results of operations. To the extent we do not effectively hire, onboard, retain and motivate key employees, our business can be harmed.
We may be subject to a variety of evolving threats, including but not limited to social engineering, such as phishing, malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions and large-scale, complex automated attacks that can evade detection for long periods of time.
We have and may continue to be subject to a variety of evolving threats, including but not limited to social engineering, such as phishing, malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions and large-scale, complex automated attacks that can evade detection for long periods of time.
In particular, our amended and restated certificate of incorporation and amended and restated bylaws: • establish a classified board of directors so that not all members are elected at one time; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; • restrict the forum for certain litigation against us to Delaware or to Federal court; • reflect the dual class structure of our common stock; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders.
In particular, our amended and restated certificate of incorporation and amended and restated bylaws: • establish a classified board of directors so that not all members are elected at one time; • permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships; • authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; • provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; 36 Table of Contents • restrict the forum for certain litigation against us to Delaware or to Federal court; • reflect the dual class structure of our common stock; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders.
As a result, we are both directly and indirectly (through our suppliers) subject to the risks of doing business outside the United States, including: 16 Table of Contents • currency fluctuations, which have impacted our results of operations significantly in recent years, including fiscal year 2022; • political, economic and social instability; • changes in tariffs and taxes; • inflationary pressures; • regulatory restrictions on our ability to operate in our preferred manner; • rapidly changing regulatory restrictions and requirements, including in the areas of data privacy, sustainability and responses to climate change, which could result in regulatory uncertainty as well as potential significant increases in compliance costs; and • less protective foreign laws relating to intellectual property.
As a result, we are both directly and indirectly (through our suppliers) subject to the risks of doing business outside the United States, including: • currency fluctuations, which have impacted our results of operations significantly in recent years, including fiscal year 2022; • political, economic and social instability; • changes in tariffs and taxes; • inflationary pressures; • regulatory restrictions on our ability to operate in our preferred manner; • rapidly changing regulatory restrictions and requirements, including in the areas of data privacy, sustainability and responses to climate change, which could result in regulatory uncertainty as well as potential significant increases in compliance costs; and • less protective foreign laws relating to intellectual property.
Over the last several years, we have been and continue to implement modifications and upgrades to our systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality and acquiring new systems with new functionality.
Over the last several years, we have been implementing and continue to implement modifications and upgrades to our systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality and acquiring new systems with new functionality.
The failure of our information technology systems and networks to operate effectively, including as a result of the threats described above as well as a result of natural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require significant capital investments to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition.
The failure of our information technology systems and networks to operate effectively, including as a result of the threats described above as well as a result of natural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause 24 Table of Contents delays in product fulfillment and reduced efficiency of our operations, could require significant capital investments to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition.
Furthermore, due to our global operations, we are subject to numerous domestic and foreign laws and regulations affecting our business, such as those related to labor, employment, worker health and safety, antitrust and competition, environmental protection, consumer protection, privacy, and anti-corruption, including but not limited to the Foreign Corrupt Practices Act (the "FCPA") and the U.K. Bribery Act.
Furthermore, due to our global operations, we are subject to numerous domestic and foreign laws and regulations affecting our business, such as those related to labor, employment, worker health and safety, antitrust and competition, environmental protection, consumer protection, privacy, and anti-corruption, including but not limited to the Foreign Corrupt Practices Act (the “FCPA”) and the U.K. Bribery Act.
If these systems suffer severe damage, disruption or shutdown and our business continuity plans, or those of our vendors, do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, which could result in lost revenues and profits, as well as reputational damage.
If these systems suffer severe damage, disruption or shutdown and our incident response or business continuity plans, or those of our vendors, do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, which could result in lost revenues and profits, as well as reputational damage.
Further, if we are unable to find alternative suppliers, replace capacity at key manufacturing or distribution locations or quickly repair damage to our information technology systems and networks, including the Internet and third-party services, or supply systems, we could be late in delivering, or be unable to deliver, products to our customers.
Further, if we are unable to find alternative suppliers or shipping channels, replace capacity at key manufacturing or distribution locations or quickly repair damage to our information technology systems and networks, including the Internet and third-party services, or supply systems, we could be late in delivering, or be unable to deliver, products to our customers.
Any failure on our part to provide attractive, effective, reliable, secure, user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure 20 Table of Contents to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with consumers, have an adverse impact on the growth of our digital commerce business globally and have an adverse impact on our business and results of operations.
Any failure on our part to provide attractive, effective, reliable, secure, user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with consumers, have an adverse impact on the growth of our digital commerce business globally and have an adverse impact on our business and results of operations.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. 36 Table of Contents Item 1B. UNRESOLVED STAFF COMMENTS Not applicable.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. 37 Table of Contents Item 1B. UNRESOLVED STAFF COMMENTS Not applicable.
From time to time, we may acquire or invest in businesses or partnerships that we believe could complement our business or offer growth opportunities. For example, in the fourth quarter of fiscal 2021, we acquired Beyond Yoga ® , a premium athletic and lifestyle apparel brand.
From time to time, we have acquired and may in the future acquire or invest in businesses or partnerships that we believe could complement our business or offer growth opportunities. For example, in the fourth quarter of fiscal 2021, we acquired Beyond Yoga ® , a premium athletic and lifestyle apparel brand.
We may face significant expenses and liability in connection with the protection of our intellectual property rights, including outside the United States, and if we are unable to successfully protect our rights or resolve intellectual property conflicts with others, our business or financial condition may be adversely affected.
We may face significant expenses and liability in connection with the protection of our intellectual property rights, including outside the United States, and if we are unable to successfully protect our rights or resolve conflicts relating to infringement of intellectual property rights with others, our business or financial condition may be adversely affected.
Any significant reduction in consumer visits to, or spending at, our and our customers' stores caused, directly or indirectly, by COVID-19, and any continued decreased spending at stores or online caused by decreased consumer confidence and spending, would result in a loss of sales and profits and, as a result, adversely impact our financial results.
Any significant reduction in consumer visits to, or spending at, our and our customers’ stores caused, directly or indirectly, by COVID-19 or any other pandemic, and any continued decreased spending at stores or online caused by decreased consumer confidence and spending, would result in a loss of sales and profits and, as a result, adversely impact our financial results.
Due to the high fixed-cost structure associated with these investments, a decline in sales or the closure of or poor performance of stores, including as a result of general declines in the macroeconomic environment, could result in significant costs and impacts to our margins.
Due to the high fixed-cost structure associated with these investments, a decline in sales or the closure of or poor performance of stores, including as a result of general declines in the macroeconomic environment, could result in significant costs and impacts to our margins and impairment charges.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face significant consequences, including, but not limited to, proceedings against the company by governmental entities (for example, investigations, fines, penalties, audits, inspections) or other entities or individuals, additional reporting requirements or oversight bans, damage to our reputation and credibility, or inability to process data or operate in certain jurisdictions, any of which could have a negative impact on our business, reputation, revenues and profits.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with obligations related to data privacy and security, we could face significant consequences, including, but not limited to, proceedings against the company by governmental entities (for example, investigations, lawsuits (including class actions), fines, penalties, audits and inspections) or other entities or individuals, additional reporting requirements or oversight bans, damage to our reputation and credibility or inability to process data or operate in certain jurisdictions, any of which could have a negative impact on our business, operations, reputation, revenues and profits.
In addition, as we work to align with the recommendations and requirements of various ratings and disclosure organizations and new and evolving regulations, we will likely expand our disclosures in these areas and we may face increased scrutiny related to our ESG activities.
In addition, as we work to align with the recommendations and requirements of various ratings and disclosure organizations and new and evolving regulations, we will likely expand our disclosures in these areas and, as a result, we may face increased scrutiny related to our ESG activities.
In addition to our own sensitive and proprietary business information, we handle transactional and personal information, including without limitation personal information about our employees, customers, consumers, and users of our digital experiences, which include online distribution channels and product engagement.
In addition to our own sensitive and proprietary business information, we handle transactional and personal information, including without limitation credit card information and personal information about our employees, customers, consumers and users of our digital experiences, which include online distribution channels and product engagement.
The ongoing impact of these government measures, as well as any further retaliatory actions taken by Russia, the U.S. and foreign government bodies, is currently unknown and could adversely affect our business, results of operations, supply chain, intellectual property, partners, customers or employees and may expose us to adverse legal proceedings in Russia in the future.
The ongoing impact of these government measures, as well as any further retaliatory actions taken by Russia, the U.S. and foreign government bodies, is uncertain and could adversely affect our business, results of operations, supply chain, intellectual property, partners, customers or employees and may expose us to adverse legal proceedings in Russia in the future.
For example, over the next several years, we plan to continue the process of implementing a new ERP system across the company with implementation in the United States scheduled for fiscal year 2023. Additionally, we are building new distribution and fulfillment facilities which are highly automated and utilize industry leading technology and equipment.
For example, over the next several years, we plan to continue the process of implementing a new ERP system across the company with implementation in the United States completed in 2023 and Europe scheduled for fiscal year 2025. Additionally, we are building new distribution and fulfillment facilities which are highly automated and utilize industry leading technology and equipment.
Increases in raw material costs, wage rates, energy 26 Table of Contents costs and freight costs, unless sufficiently offset by our pricing actions, may cause a decrease in our profitability, and negatively impact our sales volume. These factors may also have an adverse impact on our cash and working capital needs as well as those of our suppliers.
Increases in raw material costs, wage rates, energy costs and freight costs, unless sufficiently offset by our pricing actions, may cause a decrease in our profitability and negatively impact our sales volume. These factors may also have an adverse impact on our cash and working capital needs as well as those of our suppliers.
Most of the employees in our production and distribution facilities are covered by collective bargaining agreements, and any material job actions could negatively affect our results of operations. In North America, most of our distribution employees are covered by various collective bargaining agreements.
Many of the employees in our production and distribution facilities are covered by collective bargaining agreements, and any material job actions could negatively affect our results of operations. In North America, many of our distribution employees are covered by various collective bargaining agreements.
In the event of default or failure of one or more of our counterparties, we could incur significant losses or our financial liquidity could be adversely impacted, which could negatively impact our results of operations and financial condition. We have debt and interest payment requirements at a level that may restrict our future operations.
In the event of default or failure of one or more of our counterparties, we could incur significant losses or our financial liquidity could be adversely impacted, which could negatively impact our results of operations and financial condition. 32 Table of Contents We have debt and interest payment requirements at a level that may restrict our future operations.
Any failures of these vendors to properly deliver their services could similarly have a material effect on our business. We may outsource other functions in the future, which would increase our reliance on third parties. We currently rely on contract manufacturing of our products.
Any failures of these vendors to properly deliver their services could similarly have a material effect on our business. We may outsource other functions in the future, which would increase our reliance on third parties. 25 Table of Contents We currently rely on contract manufacturing of our products.
Any failure by our contract manufacturers or their suppliers to adhere to our code of conduct, labor or other laws, 25 Table of Contents appropriate labor or business practices, safety, structural or environmental standards, and the potential litigation, negative publicity and political pressure relating to any of these events, could harm our business and reputation.
Any failure by our contract manufacturers or their suppliers to adhere to our code of conduct, labor or other laws, appropriate labor or business practices, safety, structural or environmental standards, and the potential litigation, negative publicity and political pressure relating to any of these events, could harm our business and reputation.
Dollar relative to major foreign currencies, including the Euro and British Pound, unfavorably impacted our fiscal year 2022 results. Continued significant fluctuations of foreign currencies against the U.S.
Dollar relative to major foreign currencies, including the Euro and British Pound, unfavorably impacted our fiscal year 2023 results. Continued significant fluctuations of foreign currencies against the U.S.
These information technology systems are critical to many of our operating activities and our business processes and may be negatively impacted by any service interruption or shutdown.
These information technology systems are critical to many of our operating activities and our business processes and may be negatively impacted by any security incident, service interruption or shutdown.
Detecting, investigating and resolving actual or alleged violations can be extensive and require a significant diversion of time, resources, and attention from senior management. Violations of the FCPA, the U.K.
Detecting, investigating and resolving actual or alleged violations can be costly and require a significant diversion of time, resources and attention from senior management. Violations of the FCPA, the U.K.
In some of our mature markets, these stores and sites have placed competitive pressure on our primary distribution channels, and many of these stores and sites are now looking to our developing markets to grow their business; and • shrinking points of distribution, including fewer doors at our customer locations, store closures and decreased foot traffic due to, among other things, the COVID-19 pandemic, or bankruptcy or financial difficulties of a customer.
In some of our mature markets, these stores and sites have placed competitive pressure on our primary distribution channels, and many of these stores and sites are now looking to our developing markets to grow their business; and • shrinking points of distribution, including fewer doors at our customer locations, store closures and decreased foot traffic due to, among other things, or bankruptcy or financial difficulties of a customer.
Additionally, the acquisition may not be well received by the customers or employees of either company, and this could hurt our brand and result in the loss of key employees.
Additionally, acquisitions may not be well received by the customers or employees of either company, and this could hurt our brand and result in the loss of key employees.
Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states and nation-state supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm and diversion of funds.
Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states and nation-state supported actors and social-activist organizations, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm and diversion of funds.
We have been and may continue to be subject to costs associated with regulations, including for the diligence pertaining to these matters and the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities.
We have been and may continue to be subject to costs associated with regulations, including for the diligence pertaining to these matters and the cost of remediation and other changes to products, processes, or sources of supply as a consequence of 26 Table of Contents such verification activities.
Elevated inventory levels, combined with the uneven flow of receipts and shipments, could cause further capacity pressures within our U.S. distribution centers, resulting in higher costs and limiting our ability to fulfill our consumers’ and 19 Table of Contents wholesale customers' demand.
Elevated inventory levels, combined with the uneven flow of receipts and shipments, could cause further capacity pressures within our U.S. distribution centers, resulting in higher costs and limiting our ability to fulfill our consumers’ and wholesale customers’ demand.
As a public company we are subject to the additional reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations.
As a public company we are subject to the additional reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations.
Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. Recent tax legislation and regulations, including the enactment of a new corporate minimum tax in the U.S. and the U.S.
Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. 30 Table of Contents Recent tax legislation and regulations, including the enactment of a new corporate minimum tax in the U.S. and the U.S.
We are or may become involved in various types of claims, lawsuits, regulatory proceedings, and government investigations relating to our business, our products and the actions of our employees and representatives, including contractual and employment relationships, product liability, antitrust, trademark and other intellectual property rights and a variety of other matters.
We are or may become involved in various types of claims, lawsuits (including class actions), regulatory proceedings and government investigations relating to our business, our products and the actions of our employees and representatives, including contractual and employment relationships, product liability, antitrust, privacy and data protection, trademark and other intellectual property rights and a variety of other matters.
We may rely on that borrowing capacity to fund our operations. As a result, we are exposed to the risk of default by, or failure of, counterparty financial institutions. This risk may be heightened during economic downturns and periods of uncertainty in the financial markets, including as a result of the COVID-19 pandemic or other macroeconomic and geopolitical conditions.
We may rely on that borrowing capacity to fund our operations. As a result, we are exposed to the risk of default by, or failure of, counterparty financial institutions. This risk may be heightened during economic downturns and periods of uncertainty in the financial markets, including as a result of macroeconomic and geopolitical conditions.
The conflict has caused and may continue to cause adverse global economic conditions resulting from escalating geopolitical tensions, the exclusion of Russian financial institutions from the global banking system, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures and heightened cybersecurity threats.
The conflict has caused and may continue to cause adverse global economic conditions resulting from escalating geopolitical tensions, the exclusion of Russian financial institutions from the global banking system, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures, supply chain and logistics disruptions and heightened cybersecurity threats.
Maintaining, promoting and positioning our brands will depend largely on the success of our marketing, design and merchandising efforts and our ability to provide consistent, high-quality products supported by engaging marketing campaigns.
Maintaining, promoting and positioning our brands will depend largely on the success of our marketing, design and merchandising efforts and our ability to 18 Table of Contents provide consistent, high-quality products supported by engaging marketing campaigns.
Retailers that experience financial difficulties may fail to make such investments or delay them, resulting in lower 17 Table of Contents sales and orders for our products. The ongoing financial uncertainty, particularly for retailers, could also have an effect on our sales, our ability to collect on receivables and our financial condition.
Retailers that experience financial difficulties may fail to make such investments or delay them, resulting in lower sales and orders for our products. The ongoing financial uncertainty, particularly for retailers, could also have an effect on our sales, our ability to collect on receivables and our financial condition.
A significant adverse change in a customer relationship or in a customer's performance or financial position could harm our business and financial condition. Sales to our top ten wholesale customers accounted for 31%, 32% and 29% of our total net revenues in fiscal years 2022, 2021 and 2020, respectively.
A significant adverse change in a customer relationship or in a customer’s performance or financial position could harm our business and financial condition. Sales to our top ten wholesale customers accounted for 28%, 31% and 32% of our total net revenues in fiscal years 2023, 2022 and 2021, respectively.
Moreover, natural disasters such as earthquakes, hurricanes, wildfires and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our vendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition.
Moreover, natural disasters such as earthquakes, hurricanes, wildfires and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the shipping channels we use, the operations of and the shipping channels used by our vendors, manufacturers and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition.
We also may need to expend significant resources to protect against, respond to or redress problems caused by any unauthorized access.
We also may need to expend significant resources to protect against, respond to or redress problems caused by any unauthorized processing.
Consolidation in the retail industry has typically resulted in store closures, centralized purchasing decisions and increased emphasis by retailers on inventory management and productivity, which could result in fewer stores carrying our products or reduced demand by retailers for our products.
Consolidation in the retail industry has typically resulted in store closures, centralized purchasing decisions and increased emphasis by retailers on inventory management and productivity, which could result in 21 Table of Contents fewer stores carrying our products or reduced demand by retailers for our products.
The apparel industry is characterized by low barriers to entry for both suppliers and marketers, global sourcing through suppliers located throughout the world, trade liberalization, continuing movement of product sourcing to lower cost countries, regular promotional activity, and the ongoing emergence of new competitors with widely varying strategies and resources.
The global apparel industry is subject to intense competition and cost and pricing pressure The apparel industry is characterized by low barriers to entry for both suppliers and marketers, global sourcing through suppliers located throughout the world, trade liberalization, continuing movement of product sourcing to lower cost countries, regular promotional activity, and the ongoing emergence of new competitors with widely varying strategies and resources.
In addition to traditional computer “hackers,” threat actors, personnel (such as through theft or misuse), sophisticated nation-states and nation-state supported actors now engage in attacks.
In addition to traditional computer “hackers,” threat actors, personnel (such as through theft or misuse), sophisticated nation-states and nation-state supported actors and social-activist organizations now engage in attacks.
In addition, macroeconomic conditions such as increased volatility or disruption in the credit markets could adversely affect our ability to obtain financing or refinance existing debt on terms that would be acceptable to us.
In addition, 33 Table of Contents macroeconomic conditions such as increased volatility or disruption in the credit markets could adversely affect our ability to obtain financing or refinance existing debt on terms that would be acceptable to us.
We depend on contract manufacturers to maintain adequate financial resources, including access to sufficient credit, to secure a sufficient supply of raw materials, and maintain sufficient development and manufacturing capacity in an environment characterized by continuing cost pressure and demands for product innovation and speed-to-market.
As a result, we must locate and secure production capacity. We depend on contract manufacturers to maintain adequate financial resources, including access to sufficient credit, to secure a sufficient supply of raw materials, and maintain sufficient development and manufacturing capacity in an environment characterized by continuing cost pressure and demands for product innovation and speed-to-market.
Future sales of our Class A common stock by existing stockholders could cause our stock price to decline. If our existing stockholders, including employees, who obtain equity, sell or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the trading price of our Class A common stock could decline.
If our existing stockholders, including employees, who obtain equity, sell or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the trading price of our Class A common stock could decline.
Plan liabilities may impair our liquidity, have an unfavorable impact on our ability to obtain financing and place us at a competitive disadvantage compared to some of our competitors who do not have such liabilities and cash requirements. See Notes 10 and 11 to the consolidated financial statements for more information regarding these obligations.
Plan liabilities may impair our liquidity, have an unfavorable impact on our ability to obtain financing and place us at a competitive disadvantage compared to some of our competitors who do not have such 28 Table of Contents liabilities and cash requirements. See Note 10 to the consolidated financial statements for more information regarding these obligations.
Further, climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, which may affect our business operations, either in a particular region or globally, as well as the activities of our third-party vendors and other suppliers, manufacturers, and customers.
Further, climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, which may affect our business operations, either in a particular region or globally, and the shipping channels we use, as well as the activities of and the shipping channels used by our third-party vendors and other suppliers, manufacturers, and customers.
These advance orders may be canceled under certain conditions, and the risk of cancellation may increase when dealing with financially unstable retailers or retailers struggling with economic uncertainty.
These advance orders have in the past and may in the future be canceled under certain conditions, and the risk of cancellation may increase when dealing with financially unstable retailers or retailers struggling with economic uncertainty.
Natural disasters or severe weather events in regions that produce key raw materials or other inputs for our products, such as the recent flooding in Pakistan, may drive up the prices of those raw materials or constrain the availability of raw materials, adversely affecting our cost of goods.
Natural disasters or severe weather events in regions that produce key raw materials or other inputs for our products, may drive up the prices of those raw materials or constrain the availability of raw materials, adversely affecting our cost of goods.
Our Class A common stock is currently listed on the New York Stock Exchange ("NYSE") under the symbol "LEVI." However, we cannot assure you that an active trading market for our Class A common stock will be sustained.
Our Class A common stock is currently listed on the New York Stock Exchange (“NYSE”) under the symbol “LEVI.” However, we cannot assure you that an active trading market for our Class A common stock will be sustained.
The acquisition of Beyond Yoga ® or other strategic investments or acquisitions may not create value and may harm our brand and adversely affect our business, financial condition, and results of operations. We face risks arising from restructuring of our operations and uncertainty with respect to our ability to achieve any anticipated cost savings associated with such restructuring.
The acquisition of strategic investments or acquisitions may not create value and may harm our brand and adversely affect our business, financial condition, and results of operations. 22 Table of Contents We face risks arising from the ongoing restructuring of our operations and uncertainty with respect to our ability to achieve any anticipated cost savings associated with such restructuring.
We cannot provide assurance, however, that the measures we take to secure and enhance these systems will be sufficient to prevent security incidents, cyber-attacks, system failures or data or information loss. Cyber-attacks, 23 Table of Contents malicious internet-based activity and online and offline fraud are prevalent and continue to increase.
We cannot provide assurance, however, that the measures we take to secure and enhance these systems will be sufficient to prevent security incidents, cyber-attacks, system failures or data or information loss. Cyber-attacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase in frequency and magnitude.
Our failure to develop our business in new markets or disappointing growth in existing markets that we may experience could harm our business and results of operations. Future acquisitions of and investments in new businesses, including the Beyond Yoga ® acquisition, could harm our business and financial condition.
Our failure to develop our business in new markets or disappointing growth in existing markets that we may experience could harm our business and results of operations. Future acquisitions of and investments in new businesses could harm our business and financial condition.
Any and all of these factors may be exacerbated by global climate change. Cotton prices have fluctuated significantly in recent months and we expect they will continue to experience unprecedented variability and uncertainty.
Any and all of these factors may be exacerbated by global climate change. Cotton prices have fluctuated significantly in recent months, and we expect they will continue to experience unprecedented variability and uncertainty. We do not currently hedge the price of cotton.
In addition, regulatory developments such as reporting requirements on the use of "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries, or compliance with the sanctions and customs trade orders issued by the U.S. government related to raw materials, entities and individuals who are connected to a region of China, could affect the sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products.
In addition, regulatory developments such as reporting requirements on the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries, or compliance with the sanctions and customs trade orders issued by the U.S. government related to raw materials, entities and individuals who are connected to a region of China, as well as retaliatory measures or restrictions of critical materials by certain governments, could affect the sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products, or distribution of products to the United States.
Moreover, our distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to data and system security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.
Our distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to data and system security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. Moreover, some of our current distribution centers rely on aging technology.
For example, the European Union’s General Data Protection Regulation (the “EU GDPR”), the United 29 Table of Contents Kingdom’s GDPR (the “UK GDPR”) and California’s Consumer Privacy Act of 2018, as amended (the "CCPA") and the California Privacy Rights Act of 2020 (“CPRA”) impose obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored.
For example, the European Union’s General Data Protection Regulation (the “EU GDPR”), the United Kingdom’s GDPR (the “UK GDPR”), California’s Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 impose obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored or otherwise processed.
Also, because our supply chain is complex, we may face regulatory challenges in complying with applicable sanctions and trade regulations and reputational challenges with our consumers and other stakeholders if we are unable to sufficiently verify the origins for the material used in the products we sell. The global apparel industry is subject to intense cost and pricing pressure.
Also, because our supply chain is complex, we may face regulatory challenges in complying with applicable sanctions and trade regulations and reputational challenges with our consumers and other stakeholders if we are unable to sufficiently verify the origins for the material used in the products we sell.
We are also a party to a Second Amended and Restated Credit Agreement (as amended to date, the “Credit Agreement”) with several financial institutions that provides us with a senior secured revolving credit facility (the “Credit Facility”) under which we had $985.6 million of borrowing capacity as of November 27, 2022.
We are also a party to a Second Amended and Restated Credit Agreement (as amended to date, the “Credit Agreement”) with several financial institutions that provides us with a senior secured revolving credit facility (the “Credit Facility”) under which we had $942.8 million of borrowing capacity as of November 26, 2023.
These activities could harm our brand equity, our reputation, and our results of operations. In addition, we enter into franchise agreements with unaffiliated franchisees to operate stores and, in certain circumstances, websites, in many countries around the world. Under these agreements, third parties operate, or will operate, stores and websites that sell apparel and related products under our brand names.
In addition, we enter into franchise agreements with unaffiliated franchisees to operate stores and, in certain circumstances, websites, in many countries around the world. Under these agreements, third parties operate, or will operate, stores and websites that sell apparel and related products under our brand names.
As of November 27, 2022, we had $1.0 billion of unsecured debt. Additionally, we had $985.6 million of borrowing capacity under the Credit Facility. The Credit Facility is secured by domestic and Canadian inventories, accounts receivable, and other assets, such as the Levi’s® trademarks in the U.S.
As of November 26, 2023, we had $1.0 billion of unsecured debt. Additionally, we had $942.8 million of borrowing capacity under the Credit Facility. The Credit Facility is secured by domestic and Canadian inventories, accounts receivable, and other assets, such as the Levi’s ® trademarks in the U.S.
We have put into place policies and procedures for our employees, contractors, and agents aimed at ensuring legal and regulatory compliance. Violations of these regulations could subject us to criminal or civil enforcement actions, any of which could have an adverse effect on our business. We may be adversely affected by the financial health of our customers.
We have put into place policies and procedures for our employees, contractors, and agents aimed at ensuring legal and regulatory compliance. Violations of these regulations could subject us to criminal or civil enforcement actions, any of which could have an adverse effect on our business.
Although our operations in Russia were not significant, the conflict has resulted in broader economic and security concerns, including in other geographies, which has adversely affected and may continue to adversely affect our business, financial condition or results of operations. The functional currency for most of our foreign operations is the applicable local currency.
Although our operations in Russia were not significant, the conflict has resulted in broader economic and security concerns, including in other geographies, which has adversely affected and may continue to adversely affect our business, financial condition or results of operations.
This may negatively impact sales in our stores and our e-commerce channel and may cause our wholesale customers to purchase fewer products from us.
These factors, among others, may negatively impact sales in our stores and our e-commerce channel and may cause our wholesale customers to purchase fewer products from us.
For example, the EU GDPR generally restricts the transfer of personal information, including employee and consumer information, to countries outside of the EEA without appropriate safeguards or other measures.
For example, the EU GDPR and the UK GDPR generally restrict the transfer of personal information, including employee and consumer information, to countries outside of the EEA and the United Kingdom (respectively) without appropriate safeguards or other measures.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of November 27, 2022, we leased 65 administrative and sales offices in 35 countries, as well as leased 10 warehouses in two countries. As of November 27, 2022, we had 1,026 company-operated Levi's retail and outlet stores in leased premises in 38 countries: 381 stores in the Americas, 289 stores in Europe and 356 stores in Asia.
Biggest changeAs of November 26, 2023, we leased 61 administrative and sales offices in 34 countries, as well as leased 11 warehouses in four countries. As of November 26, 2023, we had 1,069 company-operated Levi's retail and outlet stores in leased premises in 37 countries: 412 stores in the Americas, 291 stores in Europe and 366 stores in Asia.
Information about our principal operating properties in use as of November 27, 2022 is summarized in the following table : Location Primary Use Leased/Owned San Francisco, CA Design and Product Development Leased Hebron, KY Distribution Owned Canton, MS Distribution Owned Henderson, NV Distribution Owned Etobicoke, Canada Distribution Owned Itapevi, Brazil Distribution Leased Cuautitlan, Mexico Distribution Leased Villa El Salvador, Peru Distribution Leased Pudahuel, Chile Distribution Leased Merone, Italy Distribution Leased Plock, Poland Manufacturing and Finishing Leased (1) Northhampton, U.K.
Information about our principal operating properties in use as of November 26, 2023 is summarized in the following table : Location Primary Use Leased/Owned San Francisco, CA Design and Product Development Leased Erlanger, KY Distribution Leased Hebron, KY Distribution Owned Canton, MS Distribution Owned Henderson, NV Distribution Owned Etobicoke, Canada Distribution Owned Itapevi, Brazil Distribution Leased Cuautitlan, Mexico Distribution Leased Villa El Salvador, Peru Distribution Leased Pudahuel, Chile Distribution Leased Dorsten, Germany Distribution Leased Plock, Poland Manufacturing and Finishing Leased (1) Northhampton, U.K.
Item 2. PROPERTIES We conduct manufacturing, distribution and administrative activities in owned and leased facilities. As of November 27, 2022, we operated two manufacturing-related facilities abroad and 12 distribution centers around the world. We have renewal rights for most of our property leases.
Item 2. PROPERTIES We conduct manufacturing, distribution and administrative activities in owned and leased facilities. As of November 26, 2023, we operated two manufacturing-related facilities abroad and 13 distribution centers around the world. We have renewal rights for most of our property leases.
Additionally, we had 61 Dockers ® retail and outlet stores in leased premises, and two Beyond Yoga retail stores.
Additionally, we had 97 Dockers ® retail and outlet stores in leased premises, and six Beyond Yoga ® retail stores.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the fourth quarter of 2022, we repurchased 2.2 million shares for $35.0 million, excluding any broker commissions. Such repurchases were made pursuant to our share repurchase program described above. Remaining share repurchase authority was $688.6 million as of January 19, 2023. (2) The average price paid per share excludes any broker commissions.
Biggest changeShare repurchase authority was $680.4 million as of January 19, 2024. (2) The average price paid per share excludes any broker commissions. Shares withheld related to the vesting or exercise of stock-based compensation awards are excluded from the disclosure.
Securities Authorized for Issuance Under Equity Incentive Plans See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance. 38 Table of Contents Cumulative Stock Performance Graph The following graph compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the S&P 500, and the S&P 500 Apparel, Accessories and Luxury Goods.
Securities Authorized for Issuance Under Equity Incentive Plans See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding securities authorized for issuance. 40 Table of Contents Cumulative Stock Performance Graph The following graph compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the S&P 500, and the S&P 500 Apparel, Accessories and Luxury Goods.
Under this program, we may repurchase shares of our capital stock from time to time. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and alternate uses of capital.
Under this program, we may repurchase shares from time to time. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and alternate uses of capital.
The following table assumes an investment of $100 (with reinvestment of all dividends) to have been made in our Class A common stock and in each index on March 21, 2019, the date our Class A common stock began trading on the NYSE, and indicates the cumulative total return to stockholders on our Class A common stock and the cumulative total return of each index at our fiscal year ends of November 24, 2019, November 29, 2020, November 28, 2021 and November 27, 2022: (in dollars) March 21, 2019 November 24, 2019 November 29, 2020 November 28, 2021 November 27, 2022 Levi Strauss & Co. $ 100.00 $ 76.40 $ 87.06 $ 124.82 $ 75.73 S&P 500 $ 100.00 $ 114.49 $ 134.47 $ 172.02 $ 156.18 S&P 500 Apparel, Accessories and Luxury Goods $ 100.00 $ 94.24 $ 89.99 $ 99.37 $ 60.55 The information under “Cumulative Stock Performance Graph” is not deemed to be “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act, and is not to be incorporated by reference in any filing of Levi Strauss & Co. under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report and irrespective of any general incorporation language in those filings. 39 Table of Contents Recent Sales of Unregistered Securities None.
The following table assumes an investment of $100 (with reinvestment of all dividends) to have been made in our Class A common stock and in each index on March 21, 2019, the date our Class A common stock began trading on the NYSE, and indicates the cumulative total return to stockholders on our Class A common stock and the cumulative total return of each index at our fiscal year ends of November 24, 2019, November 29, 2020, November 28, 2021, November 27, 2022 and November 26, 2023: (in dollars) March 21, 2019 November 24, 2019 November 29, 2020 November 28, 2021 November 27, 2022 November 26, 2023 Levi Strauss & Co. $ 100.00 $ 76.40 $ 87.06 $ 124.82 $ 75.73 $ 74.66 S&P 500 $ 100.00 $ 114.49 $ 134.47 $ 172.02 $ 156.18 $ 177.79 S&P 500 Apparel, Accessories and Luxury Goods $ 100.00 $ 94.24 $ 89.99 $ 99.37 $ 60.55 $ 47.36 The information under “Cumulative Stock Performance Graph” is not deemed to be “soliciting material” or “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act, and is not to be incorporated by reference in any filing of Levi Strauss & Co. under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report and irrespective of any general incorporation language in those filings. 41 Table of Contents Recent Sales of Unregistered Securities None.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock and in each index on March 21, 2019, the date our Class A common stock began trading on the NYSE, and its relative performance is tracked through November 27, 2022.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock and in each index on March 21, 2019, the date our Class A common stock began trading on the NYSE, and its relative performance is tracked through November 26, 2023.
The share repurchase program may be effected through Rule 10b5-1 plans or open market purchases, each in compliance with Rule 10b-18 under the Exchange Act, or privately negotiated transactions. The program may be suspended or discontinued at any time and does not have an expiration date.
The share repurchase program may be effected through Rule 10b5-1 plans, open market purchases or privately negotiated transactions, each in compliance with Rule 10b-18 under the Exchange Act. The program may be suspended or discontinued at any time and does not have an expiration date. During the fourth quarter of 2023, there were no shares repurchased.
Our Class B common stock is neither listed nor publicly traded. Holders of Record As of January 19, 2023, there were 51 holders of record of our Class A common stock and 256 holders of record of our Class B common stock.
Our Class B common stock is neither listed nor publicly traded. Holders of Record As of January 19, 2024, there were 58 holders of record of our Class A common stock and 249 holders of record of our Class B common stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total number of shares purchased (1) Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs Approximate maximum dollar value of shares that may yet be purchased under the plans or programs August 29, 2022 - October 2, 2022 1,744,289 $ 16.37 1,744,289 $ 695,049,687 October 3, 2022 - October 30, 2022 406,318 $ 15.85 406,318 $ 688,609,045 October 31, 2022 - November 27, 2022 — — — $ 688,609,045 Total 2,150,607 $ 16.27 2,150,607 _________ (1) We maintain a share repurchase program authorized by our board of directors.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Period Total number of shares purchased (1) Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs Approximate maximum dollar value of shares that may yet be purchased under the plans or programs August 28, 2023 - October 1, 2023 — $ — — $ 680,434,314 October 2, 2023 - October 29, 2023 — $ — — $ 680,434,314 October 30, 2023 - November 26, 2023 — — — $ 680,434,314 Total — $ — — _________ (1) We maintain a share repurchase program authorized by the Board.
The number of Class A beneficial stockholders is substantially greater than the number of holders of record because a large portion of our Class A common stock is held in “street name” by banks and brokerage firms.
The number of Class A beneficial stockholders is substantially greater than the number of holders of record because a large portion of our Class A common stock is held in “street name” by banks and brokerage firms through participant accounts in the Depository Trust Company, which holds shares through a single account at its nominee CEDE & Co.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes, for the periods indicated, our consolidated statements of operations, the changes in these items from period to period and these items expressed as a percentage of net revenues: Year Ended November 27, 2022 November 28, 2021 % Increase (Decrease) November 27, 2022 November 28, 2021 % of Net Revenues % of Net Revenues (Dollars in millions, except per share amounts) Net revenues $ 6,168.6 $ 5,763.9 7.0 % 100.0 % 100.0 % Cost of goods sold 2,619.8 2,417.2 8.4 % 42.5 % 41.9 % Gross profit 3,548.8 3,346.7 6.0 % 57.5 % 58.1 % Selling, general and administrative expenses 2,893.2 2,652.2 9.1 % 46.9 % 46.0 % Restructuring charges, net 9.1 8.3 9.6 % 0.1 % 0.1 % Operating income 646.5 686.2 (5.8) % 10.5 % 11.9 % Interest expense (25.7) (72.9) 64.7 % (0.4) % (1.3) % Loss on early extinguishment of debt — (36.5) 100.0 % — % (0.6) % Other income, net 28.8 3.4 * 0.5 % 0.1 % Income before income taxes 649.6 580.2 12.0 % 10.5 % 10.1 % Income tax expense 80.5 26.7 * 1.3 % 0.5 % Net income $ 569.1 $ 553.5 2.8 % 9.2 % 9.6 % Earnings per common share attributable to common stockholders: Basic $ 1.43 $ 1.38 3.6 % * * Diluted $ 1.41 $ 1.35 4.4 % * * Weighted-average common shares outstanding: Basic 397.3 401.6 (1.1) % * * Diluted 403.8 409.8 (1.5) % * * _____________ * Not meaningful 47 Table of Contents Net revenues The following table presents net revenues for each reportable segment for the periods indicated, and the changes in net revenues for each reportable segment on both reported and constant-currency bases from period to period: Year Ended % Increase (Decrease) November 27, 2022 November 28, 2021 As Reported Constant Currency (Dollars in millions) Net revenues: Levi's Brands: Americas $ 3,187.4 $ 2,934.8 8.6 % 9.0 % Europe 1,597.2 1,704.0 (6.3) % 3.8 % Asia 952.1 834.7 14.1 % 23.6 % Total Levi's Brands net revenues: 5,736.7 5,473.5 4.8 % 9.6 % Other Brands 431.9 290.4 48.7 % 54.9 % Total net revenues $ 6,168.6 $ 5,763.9 7.0 % 11.9 % As compared to the same period in the prior year, total net revenues were affected unfavorably by approximately $252 million in foreign currency exchange rates.
Biggest changeThe following table summarizes, for the periods indicated, our consolidated statements of income, the changes in these items from period to period and these items expressed as a percentage of net revenues: Year Ended November 26, 2023 November 27, 2022 % Increase (Decrease) November 26, 2023 November 27, 2022 % of Net Revenues % of Net Revenues (Dollars in millions, except per share amounts) Net revenues $ 6,179.0 $ 6,168.6 0.2 % 100.0 % 100.0 % Cost of goods sold 2,663.3 2,619.8 1.7 % 43.1 % 42.5 % Gross profit 3,515.7 3,548.8 (0.9) % 56.9 % 57.5 % Selling, general and administrative expenses 3,072.2 2,890.7 6.3 % 49.7 % 46.9 % Goodwill and other intangible asset impairment charges 90.2 11.6 * 1.5 % 0.2 % Operating income 353.3 646.5 (45.4) % 5.7 % 10.5 % Interest expense (45.9) (25.7) (78.6) % (0.7) % (0.4) % Other (expense) income, net (42.2) 28.8 * (0.7) % 0.5 % Income before income taxes 265.2 649.6 (59.2) % 4.3 % 10.5 % Income tax expense 15.6 80.5 (80.6) % 0.3 % 1.3 % Net income $ 249.6 $ 569.1 (56.1) % 4.0 % 9.2 % Earnings per common share attributable to common stockholders: Basic $ 0.63 $ 1.43 (55.9) % * * Diluted $ 0.62 $ 1.41 (56.0) % * * Weighted-average common shares outstanding (in millions): Basic 397.2 397.3 — % * * Diluted 401.7 403.8 (0.5) % * * _____________ * Not meaningful 50 Table of Contents Net revenues The following table presents net revenues for the periods indicated, and the changes in net revenues on both reported and constant-currency bases from period to period: Year Ended % Increase (Decrease) November 26, 2023 November 27, 2022 As Reported Constant Currency (Dollars in millions) Net revenues: Levi's Brands: Americas $ 3,086.9 $ 3,187.4 (3.2) % (4.2) % Europe 1,579.5 1,597.2 (1.1) % (2.1) % Asia 1,059.7 952.1 11.3 % 18.3 % Total Levi's Brands net revenues: 5,726.1 5,736.7 (0.2) % (0.1) % Other Brands 452.9 431.9 4.9 % 3.5 % Total net revenues $ 6,179.0 $ 6,168.6 0.2 % 0.2 % As compared to the same period in the prior year, currency translation did not have a significant impact on total net revenues.
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we use certain non-GAAP financial measures throughout this Annual Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.
To supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP financial measures throughout this Annual Report, as described further below, to provide investors with additional useful information about our financial performance, to enhance the overall understanding of our past performance and future prospects and to allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making.
For more information on our calculation of Adjusted free cash flow, a non-GAAP financial measures, see "- Non-GAAP Financial Measures." Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, payout ratio, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements and other factors that our board of directors may deem relevant.
For more information on our calculation of Adjusted free cash flow, a non-GAAP financial measures, see “- Non-GAAP Financial Measures.” Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, payout ratio, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements and other factors that our board of directors may deem relevant.
If necessary, we can perform a single step quantitative goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and record an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit.
For goodwill, if necessary, we perform a single step quantitative goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and record an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit.
Net income Adjusted net income Net income excluding loss on early extinguishment of debt, COVID-19 government subsidy gains, unrealized gains on marketable securities originating in prior years, charges related to the impact of changes in fair value on cash-settled stock-based compensation, COVID-19 related inventory costs and other charges, acquisition and integration related charges, and restructuring and restructuring related charges, severance and other, net, and re-measurement of our deferred tax assets and liabilities based on the lower rates as a result of the Tax Cuts and Jobs Act ("Tax Act"), adjusted to give effect to the income tax impact of such adjustments.
Net income Adjusted net income Net income excluding loss on early extinguishment of debt, COVID-19 government subsidy gains, unrealized gains on marketable securities originating in prior years, charges related to the impact of changes in fair value on cash-settled stock-based compensation, COVID-19 related inventory costs and other charges, acquisition and integration related charges, and restructuring and restructuring related charges, severance and other, net, and re-measurement of our deferred tax assets and liabilities based on the lower rates as a result of the Tax Cuts and Jobs Act (“Tax Act”), adjusted to give effect to the income tax impact of such adjustments.
Cash uses Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to our pension plans and payments for postretirement health benefit plans, payment of taxes resulting from net settlement of shares issued under our 2016 Equity Incentive Plan, as amended to date ("2016 Plan"), and our 2019 Equity Incentive Plan as amended to date ("2019 Plan"), and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures in our line of business.
Cash uses Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to our pension plans and payments for postretirement health benefit plans, payment of taxes resulting from net settlement of shares issued under our 2016 Equity Incentive Plan, as amended to date ("2016 Plan"), and our 2019 Equity Incentive Plan as amended to date (“2019 Plan”), and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures in our line of business.
For U.S. qualified plans, these estimates can exceed the projected annual minimum required contributions in an effort to level out potential future funding requirements and provide annual funding flexibility. The 2023 contribution amounts will be recalculated at the end of the plans' fiscal years, which for our U.S. pension plan is at the beginning of our third fiscal quarter.
For U.S. qualified plans, these estimates can exceed the projected annual minimum required contributions in an effort to level out potential future funding requirements and provide annual funding flexibility. The 2024 contribution amounts will be recalculated at the end of the plans' fiscal years, which for our U.S. pension plan is at the beginning of our third fiscal quarter.
We plan to deploy capital across all four of our capital allocation priorities: (1) to reinvest 3.5-4% of our revenue in capital, including high growth investment opportunities and initiatives, to grow our business organically, (2) to return capital to our stockholders in the form of cash dividends, with a dividend payout ratio target of 25-35% of net income; (3) to pursue high return on investment acquisitions, both organic and inorganic, that support our current strategies; and (4) to repurchase shares with the goal of offsetting dilution or opportunistic buybacks or both, while maintaining an adequate public float of our shares.
Over the long term, we plan to deploy capital across all four of our capital allocation priorities: (1) to reinvest 3.5-4% of our revenue in capital, including high growth investment opportunities and initiatives, to grow our business organically, (2) to return capital to our stockholders in the form of cash dividends, with a dividend payout ratio target of 25-35% of net income; (3) to pursue high return on investment acquisitions, both organic and inorganic, that support our current strategies; and (4) to repurchase shares with the goal of offsetting dilution or opportunistic buybacks or both, while maintaining an adequate public float of our shares.
We continue to pursue mitigation strategies and create new efficiencies in our global supply chain. Effects of Inflation Inflationary pressures have negatively impacted our revenue, operating margins and net income in fiscal 2022, including increased costs of labor, products and freight, and beginning in July 2022, a slowdown in consumer demand for our products.
We continue to pursue mitigation strategies and create new efficiencies in our global supply chain. Effects of Inflation Inflationary pressures have negatively impacted our revenue, operating margins and net income in fiscal years 2022 and 2023, including increased costs of labor, products and freight, and beginning in July 2022, a slowdown in consumer demand for our products.
On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency. • Selling expenses include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations. • We reflect substantially all distribution costs in selling, general and administrative expenses, including costs related to receiving and inspection at distribution centers, warehousing, shipping to our customers, handling, and certain other activities associated with our distribution network. 46 Table of Contents Results of Operations A discussion regarding our results of operations for fiscal year 2022 compared to fiscal year 2021 is presented below.
On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency. • Selling expenses include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations. • We reflect substantially all distribution costs in selling, general and administrative expenses, including costs related to receiving and inspection at distribution centers, warehousing, shipping to our customers, handling, and certain other activities associated with our distribution network. 49 Table of Contents Results of Operations A discussion regarding our results of operations for fiscal year 2023 compared to fiscal year 2022 is presented below.
We also sell our products directly to consumers through a variety of formats, including our own company-operated mainline and outlet stores, company- 41 Table of Contents operated e-commerce sites and select shop-in-shops that we operate within department stores and other third-party retail locations.
We also sell our products directly to consumers through a variety of formats, including our own company-operated mainline and outlet stores, company- 43 Table of Contents operated e-commerce sites and select shop-in-shops that we operate within department stores and other third-party retail locations.
Refer to Adjusted net income table for more information. (2) We define constant-currency Adjusted net income margin as constant-currency Adjusted net income as a percentage of constant-currency net revenues. * Not meaningful 64 Table of Contents Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S.
Refer to Adjusted net income table for more information. (2) We define constant-currency Adjusted net income margin as constant-currency Adjusted net income as a percentage of constant-currency net revenues. * Not meaningful 68 Table of Contents Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with U.S.
Our Credit Agreement provides for an asset-based, senior secured revolving credit facility ("Credit Facility"), in which the borrowing availability is primarily based on the value of our U.S. Levi’s ® trademarks and the levels of accounts receivable and inventory in the United States and Canada.
Our Credit Agreement provides for an asset-based, senior secured revolving credit facility (“Credit Facility”), in which the borrowing availability is primarily based on the value of our U.S. Levi’s ® trademarks and the levels of accounts receivable and inventory in the United States and Canada.
This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors, as of the test date, to determine if it was more-likely-than-not that the fair values of our reporting units were below carrying value. 65 Table of Contents For our other reporting units and other indefinite-lived intangible assets, including Beyond Yoga, a quantitative assessment was performed.
This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors, as of the test date, to determine if it was more-likely-than-not that the fair values of our reporting units were below carrying value. For our other reporting units and indefinite-lived intangible assets, including Beyond Yoga ® , a quantitative assessment was performed.
Due to the timing of our fiscal year end, a particular fiscal year might include one, two or no Black Fridays, which could impact our net revenues for the fiscal year. Fiscal years 2022 and 2021 included one Black Friday.
Due to the timing of our fiscal year end, a particular fiscal year might include one, two or no Black Fridays, which could impact our net revenues for the fiscal year. Fiscal years 2023 and 2022 included one Black Friday.
When testing goodwill and other indefinite-lived intangible assets for impairment, we have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test.
When testing goodwill and indefinite-lived intangible assets for impairment, we have the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit or the indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test.
If our long-term strategies change, planned business performance expectations are not met over time, or specific valuation factors outside of our control, such as discount rates, change significantly, then the estimated fair values of the reporting unit, the intangible assets, or both might decline and lead to impairment charges in the future.
As our long-term strategies change, planned business performance expectations are not met over time, or specific valuation factors outside of our control, such as discount rates, change significantly, then the estimated fair values of the reporting unit, the intangible assets, or both might continue to decline and lead to additional impairment charges in the future.
However, constant-currency results are non-GAAP financial measures and are not meant to be 62 Table of Contents considered in isolation or as a substitute for comparable measures prepared in accordance with GAAP.
However, constant-currency results are non-GAAP financial measures and are not meant to be 66 Table of Contents considered in isolation or as a substitute for comparable measures prepared in accordance with GAAP.
This approach has enabled the Levi’s ® brand to evolve with the times and continually reach a new, younger audience, while our rich heritage continues to drive relevance and appeal across demographics. The Dockers ® brand helped drive "Casual Friday" in the 1990s and has been a cornerstone of casual menswear for more than 30 years.
This approach has enabled the Levi’s ® brand to evolve with the times and continually reach a new, younger audience, while our rich heritage continues to drive relevance and appeal across demographics. The Dockers ® brand helped drive “Casual Friday” in the 1990s and has been a cornerstone of casual menswear for more than 30 years.
Changes in such estimates, based on newly available information, or different assumptions or conditions, may affect amounts reported in future periods. We summarize our critical accounting estimates and assumptions below. Revenue recognition . Revenue is recorded net of an allowance for estimated returns, discounts and retailer promotions and other similar incentives.
Changes in such estimates, based on newly available information, or different assumptions or conditions, may affect amounts reported in future periods. We summarize our critical accounting estimates and assumptions below. Sales returns and allowances . Revenue is recorded net of an allowance for estimated returns, discounts and retailer promotions and other similar incentives.
Determination of the fair value of a reporting unit and intangible asset is based on management’s assessment, using industry accepted valuation models. Third-party valuation specialists are engaged when necessary.
Determination of the fair value of a reporting unit and indefinite-lived intangible asset is based on management’s assessment, using industry accepted valuation models. Third-party valuation specialists are engaged when necessary.
Short-term borrowings of $11.7 million at various foreign subsidiaries were expected to be either paid over the next 12 months or refinanced at the end of their applicable terms. Our long-term debt agreements contain customary covenants restricting our activities as well as those of our subsidiaries.
Short-term borrowings of $12.5 million at various foreign subsidiaries were expected to be either paid over the next 12 months or refinanced at the end of their applicable terms. Our long-term debt agreements contain customary covenants restricting our activities as well as those of our subsidiaries.
Further, there is greater uncertainty with respect to potential changes in tax and trade regulations, sanctions and export controls which also increase volatility in the global economy.
There is greater uncertainty with respect to potential changes in trade regulations, sanctions and export controls which also increase volatility in the global economy.
Strict lockdowns and zero-tolerance policy shutdowns in China have resulted in temporary store closures and reduced traffic throughout the country during 2022. Across the rest of our markets, most of our company-operated stores and wholesale customer doors were open throughout the year.
In fiscal year 2022, strict lockdowns and zero-tolerance policy shutdowns in China resulted in temporary store closures and reduced traffic throughout the country. Across the rest of our markets, most of our company-operated stores and wholesale customer doors were open throughout fiscal year 2022.
There can be no assurance that we will be able to successfully meet these expectations which may impact our financial results. 43 Table of Contents • The diversification of our business model across geographies, channels, brands, and categories affects our gross margin.
There can be no assurance that we will be able to successfully meet these expectations which may impact our financial results. • The diversification of our business model across geographies, channels, brands, and categories affects our gross margin.
These trends may impact our financial results, affecting inventory, revenue, operating margins and net income. • Consumer expectations and related competitive pressures have increased and are expected to continue to increase relative to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and other evolving expectations.
These trends have impacted and may continue to impact our financial results, affecting inventory, revenue, operating margins and net income. 45 Table of Contents • Consumer expectations and related competitive pressures have increased and are expected to continue to increase relative to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and other evolving expectations.
This included the closure of the majority of our company-operated stores in Russia, as well as the suspension of shipments to our wholesale and licensing customers in Russia and Ukraine. In response to this crisis, the United States and other countries have implemented economic and other sanctions.
This included the closure of the majority of our company-operated stores in Russia, as well as the suspension of shipments to our wholesale and licensing customers in Russia and Ukraine. In 44 Table of Contents response to this crisis, the United States and other countries have implemented economic and other sanctions.
Refer to the "Adjusted EBIT and Adjusted EBITDA" table for more information.
Refer to Adjusted EBIT and Adjusted EBITDA table for more information.
Indebtedness The borrower of substantially all of our debt is Levi Strauss & Co., the parent and U.S. operating company. Of our total debt of $1.0 billion as of November 27, 2022, 100% was fixed-rate debt, net of capitalized debt issuance costs. As of November 27, 2022, our required aggregate debt principal payments of $1.0 billion begin in 2027.
Indebtedness The borrower of substantially all of our debt is Levi Strauss & Co., the parent and U.S. operating company. Of our total debt of $1.0 billion as of November 26, 2023, 100% was fixed-rate debt, net of capitalized debt issuance costs. As of November 26, 2023, our required aggregate debt principal payments of $1.0 billion begin in 2027.
We intend to achieve these strategies through operational excellence, financial discipline, and the digital transformation of our business processes and ways of working, including continuing to invest in key omni-channel capabilities, digital tools across the business and updating our ERP system.
We intend to achieve these strategies through operational excellence, financial discipline, and the digital transformation of our business processes and ways of working, including continuing to invest in key omni-channel capabilities, digital tools across the business and updating our ERP system. Supply Chain and U.S.
Additionally, elevated inventory levels, combined with the uneven flow of receipts and shipments could cause further capacity pressures within our U.S. distribution centers, resulting in higher costs and limiting our ability to fulfill our customer's demand.
Additionally, elevated inventory levels, combined with the uneven flow of receipts and shipments is causing further capacity pressures within our U.S. distribution centers, resulting in higher costs and limiting our ability to fulfill our customer’s demand.
We expect that stakeholder expectations with respect to ESG practices will continue to evolve rapidly, which may necessitate additional resources to monitor, report on, and adjust our operations. • Wholesaler/retailer dynamics and wholesale channels remain challenged by mixed growth prospects due to increased competition from e-commerce shopping, pricing transparency enabled by the proliferation of online technologies, and vertically-integrated specialty stores.
We expect that stakeholder expectations and actions with respect to ESG practices and social issues will continue to evolve rapidly, which may negatively impact our financial results, and which may necessitate additional resources to monitor, report on, and adjust our operations. • Wholesaler/retailer dynamics and wholesale channels remain challenged by mixed growth prospects due to increased competition from e-commerce shopping, pricing transparency enabled by the proliferation of online technologies, and vertically-integrated specialty stores.
The previously approved $200 million share repurchase program was completed as of the end of the second quarter of 2022. During fiscal 2022, 8.7 million shares were repurchased for $172.9 million, plus broker's commissions, in the open market.
The previously approved $200 million share repurchase program was completed as of the end of the second quarter of 2022. During fiscal 2023, 0.5 million shares were repurchased for $8.1 million, plus broker's commissions, in the open market. During fiscal 2022, 8.7 million shares were repurchased for $172.9 million, plus broker's commissions, in the open market.
The level of our working capital reflects the seasonality of our business and varies throughout the year to support our seasonal and holiday revenue patterns as well as business trends. 44 Table of Contents Our Results for the Fourth Quarter of Fiscal Year 2022 • Net revenues.
The level of our working capital reflects the seasonality of our business and varies throughout the year to support our seasonal and holiday revenue patterns as well as business trends. 47 Table of Contents Our Results for the Fourth Quarter of Fiscal Year 2023 • Net revenues.
This assessment relies on estimates and assumptions and involves significant judgments about future events. To the extent that our view as to the outcome of these matters changes, we will adjust income tax expense in the period in which such determination is made. We classify interest and penalties related to income taxes as income tax expense.
This assessment relies on estimates and assumptions and involves significant judgments about future events. To the extent that our view as to the outcome of these matters changes, we will adjust income tax expense in the period in which such determination is made.
During the second half of 2022, we recognized a $15.8 million gain related to the early termination of certain store lease agreements related to the Russia-Ukraine crisis. All charges are included in selling, general and administrative ("SG&A") expenses in the accompanying consolidated statements of operations.
During the second half of 2022, we recognized a $15.8 million gain related to the early termination of certain store lease agreements related to the Russia-Ukraine crisis. All charges are included in selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of income.
Revenues from our international business, which includes our Europe and Asia segments, as well as Canada and Latin America from our Americas segment, represented 53% of our net revenues in fiscal year 2022, as compared to 55% in fiscal year 2021.
Revenues from our international business, which includes our Europe and Asia segments, as well as Canada and Latin America from our Americas segment, represented 56% of our net revenues in fiscal year 2023, as compared to 53% in fiscal year 2022.
We estimated these payments based on prior experience and forecasted activity for these items. For more information, see Note 11 to our audited consolidated financial statements included in this report. The above table does not include amounts related to our uncertain tax positions of $38.1 million.
We estimated these payments based on prior experience and forecasted activity for these items. For more information, see Note 10 to our audited consolidated financial statements included in this report. The above table does not include amounts related to our uncertain tax positions of $42.3 million.
(2) Amounts reflect contractual obligations relating to our existing leased facilities as of November 27, 2022, and therefore do not reflect our planned future openings of company-operated retail stores. For more information, see "Item 2 – Properties." (3) Inventory purchase commitments represent agreements to purchase fixed or minimum quantities of goods, including fabric commitments, at determinable prices.
(2) Amounts reflect contractual obligations relating to our existing leased facilities as of November 26, 2023, and therefore do not reflect our planned future openings of company-operated retail stores. For more information, see “Item 2 – Properties.” (3) Inventory purchase commitments represent agreements to purchase fixed or minimum quantities of goods, including fabric commitments, at determinable prices.
Based on the fair value of our capital stock and the number of shares outstanding as of November 27, 2022, future payments related to shares surrendered for employee tax withholding on the exercise or vesting of outstanding equity awards could range up to approximately $50 million, which could become payable in 2023.
Based on the fair value of our capital stock and the number of shares outstanding as of November 26, 2023, future payments related to shares surrendered for employee tax withholding on the exercise or vesting of outstanding equity awards could range up to approximately $30 million, which could become payable in 2024.
Across all of our brands, pants – including jeans, casual pants, dress pants, shorts, skirts, and activewear – represented 67% of our total units sold in both fiscal years 2022 and 2021, respectively. Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 26% and 25% of our total units sold in fiscal years 2022 and 2021, respectively.
Across all of our brands, pants – including jeans, casual pants, dress pants, shorts, skirts, and activewear – represented 68% and 67% of our total units sold in fiscal years 2023 and 2022, respectively. Tops – including shirts, sweaters, jackets, dresses and jumpsuits – represented 26% of our total units sold in both fiscal year 2023 and fiscal year 2022.
Given the relatively small excess fair value over carrying value, if profitability trends decline over time from those that are expected, it is possible that an interim test, or our annual impairment test, could result in an impairment of the related assets.
Given that carrying value approximates fair value, if profitability trends decline over time from those that are expected, it is possible that an interim test, or our annual impairment test, could result in additional impairment of the related assets.
Products other than denim bottoms – which include tops, footwear and accessories and pants excluding jeans – represented 38% and 37% of our net revenues in fiscal years 2022 and 2021, respectively.
Products other than denim bottoms – which include tops, footwear and accessories and pants excluding jeans – represented 39% and 38% of our net revenues in fiscal years 2023 and 2022, respectively.
A discussion regarding our results of operations for fiscal year 2021 compared to fiscal year 2020 can be found under Item 7 – Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended November 28, 2021, filed with the SEC on January 26, 2022.
A discussion regarding our results of operations for fiscal year 2022 compared to fiscal year 2021 can be found under Item 7 – Management’s Discussion and Analysis in our Annual Report on Form 10-K for the year ended November 27, 2022, filed with the SEC on January 25, 2023.
Sales of Levi’s ® brand products represented approximately 87% of our net revenues in both fiscal year 2022 and fiscal year 2021. Our wholesale channel generated 62% and 64% of our net revenues in fiscal years 2022 and 2021, respectively.
Sales of Levi’s ® brand products represented approximately 87% of our net revenues in both fiscal year 2023 and fiscal year 2022. Our wholesale channel generated 57% and 62% of our net revenues in fiscal years 2023 and 2022, respectively.
In January 2023, our board of directors declared a cash dividend of $0.12 per share to holders of record of its Class A and Class B common stock at the close of business on February 8, 2023, for a total quarterly dividend of approximately $47 million.
In January 2024, our board of directors declared a cash dividend of $0.12 per share to holders of record of its Class A and Class B common stock at the close of business on February 7, 2024, for a total quarterly dividend of approximately $48 million.
Our global digital business, which includes our e-commerce sites as well as the online business of our wholesale customers, including that of traditional wholesalers as well as pure-play (online-only) wholesalers represent approximately 22% of our total net revenues in both fiscal years.
Our global digital business, which includes our e-commerce sites as well as the online business of our wholesale customers, including that of traditional wholesalers as well as pure-play (online-only) wholesalers represent approximately 21% and 22% of our total net revenues in fiscal years 2023 and 2022, respectively.
Additionally, weather events like the recent flooding in Pakistan, could impact the cost or availability of raw materials integral to our products such as cotton. • There has been increased focus from our stakeholders, including consumers, employees and investors, and more recently regulatory organizations on corporate environmental, social, and governance (“ESG”) practices, including practices related to the causes and impacts of climate change.
Additionally, weather events could impact the cost or availability of raw materials integral to our products such as cotton. • There has been increased focus from our stakeholders, including consumers, employees and investors, and more recently regulatory organizations on corporate environmental, social, and governance (“ESG”) practices, including corporate practices related to the causes and impacts of climate change and corporate statements, practices or products related to a variety of social issues.
We were in compliance with all of these covenants as of November 27, 2022. 55 Table of Contents Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Margin, Adjusted SG&A, Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Margin, and Adjusted Diluted Earnings per Share We define the following non-GAAP measures as follows: Most comparable GAAP measure Non-GAAP measure Non-GAAP measure definition Gross profit Adjusted gross profit Gross profit excluding COVID-19 and acquisition related inventory costs Gross margin Adjusted gross margin Adjusted gross profit as a percentage of net revenues Selling, general and administration ("SG&A") expenses Adjusted SG&A SG&A expenses excluding changes in fair value on cash-settled stock-based compensation, COVID-19 related charges, acquisition and integration related charges, impairment charges and early termination gains, net and restructuring related charges, severance and other, net.
We were in compliance with all of these covenants as of November 26, 2023. 57 Table of Contents Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Margin, Adjusted SG&A, Adjusted SG&A Margin, Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income Margin, and Adjusted Diluted Earnings per Share We define the following non-GAAP measures as follows: Most comparable GAAP measure Non-GAAP measure Non-GAAP measure definition Gross profit Adjusted gross profit Gross profit excluding COVID-19 and acquisition related inventory costs Gross margin Adjusted gross margin Adjusted gross profit as a percentage of net revenues Selling, general and administration (“SG&A”) expenses Adjusted SG&A SG&A expenses excluding changes in fair value on COVID-19 related charges, acquisition and integration related charges, impairment charges and early termination gains, net and restructuring related charges, severance and other, net.
November 27, 2022 November 28, 2021 (Dollars in millions) Total debt, excluding finance leases $ 996.2 $ 1,026.6 Last twelve months Adjusted EBITDA $ 867.5 $ 854.9 Leverage ratio 1.1 1.2 61 Table of Contents Adjusted Free Cash Flow: In fiscal 2022, the definition of Adjusted free cash flow, a non-GAAP financial measure, was revised to include net cash flow from operating activities less purchases of property, plant and equipment.
November 26, 2023 November 27, 2022 (Dollars in millions) Total debt, excluding finance leases $ 1,021.9 $ 996.2 Last twelve months Adjusted EBITDA $ 715.6 $ 867.5 Leverage ratio 1.4 1.1 65 Table of Contents Adjusted Free Cash Flow: In fiscal 2022, the definition of Adjusted free cash flow, a non-GAAP financial measure, was revised to include net cash flow from operating activities less purchases of property, plant and equipment.
Fiscal years 2022 and 2021 were 52-week years, ending on November 27, 2022 and November 28, 2021, respectively and each quarter of fiscal years 2022 and 2021 consisted of 13 weeks. Segments .
Fiscal years 2023 and 2022 were 52-week years, ending on November 26, 2023 and November 27, 2022, respectively, and each quarter of fiscal years 2023 and 2022 consisted of 13 weeks. Segments .
As of November 27, 2022, our products were sold in approximately 50,000 retail locations in more than 110 countries, including approximately 3,200 brand-dedicated stores and shop-in-shops. As of November 27, 2022, we had company-operated stores located in 38 countries and approximately 550 company-operated shop-in-shops. The remainder of our brand-dedicated stores and shop-in-shops were operated by franchisees and other partners.
As of November 26, 2023, our products were sold in over 45,000 retail locations in more than 110 countries, including approximately 3,200 brand-dedicated stores and shop-in-shops. As of November 26, 2023, we had company-operated stores located in 37 countries and approximately 550 company-operated shop-in-shops. The remainder of our brand-dedicated stores and shop-in-shops were operated by franchisees and other partners.
For more information on Adjusted gross margin, Adjusted SG&A, Adjusted EBIT, Adjusted net income and Adjusted diluted earnings per share, measures not prepared in accordance with United States generally accepted accounting principles, and reconciliations of such measures to net income and diluted earnings per share, see “—Non-GAAP Financial Measures.” Financial Information Presentation Fiscal year .
Currency translation favorably affected Adjusted diluted earnings per share by $0.05. 48 Table of Contents For more information on Adjusted gross margin, Adjusted SG&A, Adjusted EBIT, Adjusted net income and Adjusted diluted earnings per share, measures not prepared in accordance with United States generally accepted accounting principles, and reconciliations of such measures to net income and diluted earnings per share, see “—Non-GAAP Financial Measures.” Financial Information Presentation Fiscal year .
Cash flows from financing activities Cash used for financing activities was $365.4 million for fiscal year 2022, as compared to $840.9 million for fiscal year 2021. Cash used in 2022 primarily reflects common stock repurchases of $175.7 million and dividend payments of $174.3 million.
Cash flows from financing activities Cash used for financing activities was $214.1 million for fiscal year 2023, as compared to $365.4 million for fiscal year 2022. Cash used in 2023 primarily reflects dividend payments of $190.5 million. Cash used in fiscal year 2022 primarily reflects dividend payments of $174.3 million and common stock repurchases of $175.7 million.
November 27, 2022 November 28, 2021 (Dollars in millions) Most comparable GAAP measure: Total debt, excluding finance leases $ 996.2 $ 1,026.6 Non-GAAP measure: Total debt, excluding finance leases $ 996.2 $ 1,026.6 Cash and cash equivalents (429.6) (810.3) Short-term investments in marketable securities (70.6) (91.5) Net debt $ 496.0 $ 124.8 The following table presents a reconciliation of total debt, excluding capital leases, the most directly comparable financial measure calculated in accordance with GAAP, to leverage ratio for each of the periods presented.
November 26, 2023 November 27, 2022 (Dollars in millions) Most comparable GAAP measure: Total debt, excluding finance leases $ 1,021.9 $ 996.2 Non-GAAP measure: Total debt, excluding finance leases $ 1,021.9 $ 996.2 Cash and cash equivalents (398.8) (429.6) Short-term investments in marketable securities — (70.6) Net debt $ 623.1 $ 496.0 The following table presents a reconciliation of total debt, excluding capital leases, the most directly comparable financial measure calculated in accordance with GAAP, to leverage ratio for each of the periods presented.
The inclusion of these projections and estimates should not be regarded as a representation by us that the estimates will prove to be correct. 54 Table of Contents Cash flows The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows: Year Ended November 27, 2022 November 28, 2021 (Dollars in millions) Cash provided by operating activities $ 228.1 $ 737.3 Cash used for investing activities (235.7) (571.8) Cash (used for) provided by financing activities (365.4) (840.9) Cash and cash equivalents as of fiscal year end 429.6 810.3 Cash flows from operating activities Cash provided by operating activities was $228.1 million for fiscal year 2022, as compared to $737.3 million for fiscal year 2021.
The inclusion of these projections and estimates should not be regarded as a representation by us that the estimates will prove to be correct. 56 Table of Contents Cash flows The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows: Year Ended November 26, 2023 November 27, 2022 (Dollars in millions) Cash provided by operating activities $ 435.5 $ 228.1 Cash used for investing activities (240.7) (235.7) Cash used for financing activities (214.1) (365.4) Cash and cash equivalents as of fiscal year end 398.8 429.6 Cash flows from operating activities Cash provided by operating activities was $435.5 million for fiscal year 2023, as compared to $228.1 million for fiscal year 2022.
The remainder of our products are footwear and accessories. Men's products generated 65% of our net revenues in both fiscal years 2022 and 2021. Women's products generated 33% of our net revenues in both fiscal years 2022 and 2021. The remainder of our products are non-gendered.
The remainder of our products are footwear and accessories. Men's products generated 64% and 65% of our net revenues in fiscal years 2023 and 2022, respectively. Women's products generated 34% and 33% of our net revenues in fiscal years 2023 and 2022, respectively. The remainder of our products are non-gendered.
Our Europe and Asia businesses, collectively, contributed 41% of our net revenues and 41% of our segment operating income in fiscal year 2022, as compared to 44% of our net revenues and 39% of our segment operating income in fiscal year 2021.
Our Europe and Asia businesses, collectively, contributed 43% of our net revenues and 46% of our segment operating income in fiscal year 2023, as compared to 41% of our net revenues and 41% of our segment operating income in fiscal year 2022.
For fiscal 2022, we elected to perform the qualitative assessment for the goodwill in certain of our reporting units and certain indefinite-lived intangible assets.
For fiscal 2023, we elected to perform a qualitative assessment for the goodwill in certain of our reporting units and 69 Table of Contents certain indefinite-lived intangible assets.
Our DTC channel generated 38% and 36% of our net revenues in fiscal years 2022 and 2021, respectively, with our company operated e-commerce business representing 19% and 21% of DTC channel net revenues and 7% and 8% of total net revenues in fiscal years 2022 and 2021, respectively.
Our DTC channel generated 43% and 38% of our net revenues in fiscal years 2023 and 2022, respectively, with our company operated e-commerce business representing 20% and 19% of DTC channel net revenues and 9% and 7% of total net revenues in fiscal years 2023 and 2022, respectively.
Year Ended November 27, 2022 November 28, 2021 (Dollars in millions) Most comparable GAAP measure: Net cash provided by operating activities $ 228.1 $ 737.3 Net cash used for investing activities (235.7) (571.8) Net cash (used for) provided by financing activities (365.4) (840.9) Non-GAAP measure: Net cash provided by operating activities $ 228.1 $ 737.3 Purchases of property, plant and equipment (267.1) (166.9) Adjusted free cash flow $ (39.0) $ 570.4 Constant-Currency: We report our operating results in accordance with GAAP, as well as on a constant-currency basis in order to facilitate period-to-period comparisons of our results without regard to the impact of fluctuating foreign currency exchange rates.
Year Ended November 26, 2023 November 27, 2022 (Dollars in millions) Most comparable GAAP measure: Net cash provided by operating activities $ 435.5 $ 228.1 Net cash used for investing activities (240.7) (235.7) Net cash used for financing activities (214.1) (365.4) Non-GAAP measure: Net cash provided by operating activities $ 435.5 $ 228.1 Purchases of property, plant and equipment (315.5) (268.3) Adjusted free cash flow $ 120.0 $ (40.2) Constant-Currency: We report our operating results in accordance with GAAP, as well as on a constant-currency basis in order to facilitate period-to-period comparisons of our results without regard to the impact of fluctuating foreign currency exchange rates.
Currency translation unfavorably affected operating income in the segment by approximately $45 million as compared to the prior year. Excluding the effects of currency, the decrease in operating income was primarily due to higher SG&A expenses as a percentage of net revenues, partially offset with higher net revenues and gross margin. • Asia.
Excluding the effects of currency, the decrease in operating income was primarily due to a lower gross margin and higher SG&A expenses as a percent of revenue as compared to the prior year. • Asia. Currency translation unfavorably affected operating income in the segment by approximately $10 million as compared to the prior year.
In the absence of a dividend policy, we will continue to declare dividends on a quarterly basis and the expectation is that they will grow in line with net income.
In the absence of a dividend policy, we will continue to declare dividends on a quarterly basis and the expectation is that they will grow in line with net income. At this time, we expect dividends to be at $0.12 per share.
Year Ended November 27, 2022 November 28, 2021 % Increase (Decrease) (Over Prior Year) (Dollars in millions) Adjusted EBIT (1) $ 713.0 $ 712.9 — % Impact of foreign currency exchange rates — (51.2) * Constant-currency Adjusted EBIT $ 713.0 $ 661.7 7.8 % Adjusted EBIT margin 11.6 % 12.4 % (6.5) % Impact of foreign currency exchange rates — (0.4) % * Constant-currency Adjusted EBIT margin (2) 11.6 % 12.0 % (3.3) % _____________ (1) Adjusted EBIT is reconciled from net income which is the most comparable GAAP measure.
Year Ended November 26, 2023 November 27, 2022 % Increase (Decrease) (Dollars in millions) Adjusted EBIT (1) $ 554.8 $ 713.0 (22.2) % Impact of foreign currency exchange rates — 5.7 * Constant-currency Adjusted EBIT $ 554.8 $ 718.7 (22.8) % Adjusted EBIT margin 9.0 % 11.6 % (22.4) % Impact of foreign currency exchange rates — 0.1 % * Constant-currency Adjusted EBIT margin (2) 9.0 % 11.7 % (23.1) % _____________ (1) Adjusted EBIT is reconciled from net income which is the most comparable GAAP measure.
A decline in consumer spending, for any reason, could have an adverse effect on our revenues, operating margins and net income. Inability to appropriately forecast consumer demand could lead to elevated inventory levels both with us and our customers, resulting in fewer full-priced sales and a more promotional environment.
A decline in consumer spending has had and may continue to have an adverse effect on our revenues, operating margins and net income. Challenges forecasting consumer demand has and may continue to lead to elevated inventory levels both with us and our customers, resulting in fewer full-priced sales and a more promotional environment.
The maximum availability under the facility is $1.0 billion, of which $950.0 million is available to us for revolving loans in U.S. Dollars and $50.0 million is available to us for revolving loans either in U.S. Dollars or Canadian Dollars.
The maximum availability under the facility is $1.0 billion, of which $950.0 million is available to us for revolving loans in U.S. Dollars and $50.0 million is available to us for revolving loans either in U.S. Dollars or Canadian Dollars. As of November 26, 2023, we did not have any borrowings under the Credit Facility.
For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for Goodwill and Intangible Assets, see Note 1: Significant Accounting Policies - Goodwill and Intangible Assets. Income tax. Significant judgment is required in determining our global income tax provision.
For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for goodwill and intangible assets, see Note 1: Significant Accounting Policies - Goodwill and Intangible Assets. For further discussion of the impairment charges taken in 2023, see Note 5: Goodwill and Other Intangible Assets. Income tax.
Gross profit The following table shows consolidated gross profit and gross margin for the periods indicated and the changes in these items from period to period: Year Ended November 27, 2022 November 28, 2021 % Increase (Decrease) (Dollars in millions) Net revenues $ 6,168.6 $ 5,763.9 7.0 % Cost of goods sold 2,619.8 2,417.2 8.4 % Gross profit $ 3,548.8 $ 3,346.7 6.0 % Gross margin 57.5 % 58.1 % As compared to the same period in the prior year, currency translation unfavorably impacted gross profit by approximately $155 million.
There were 36 more Docker’s stores in operation as of November 26, 2023, as compared to November 27, 2022. 51 Table of Contents Gross profit The following table shows consolidated gross profit and gross margin for the periods indicated and the changes in these items from period to period: Year Ended November 26, 2023 November 27, 2022 % Increase (Decrease) (Dollars in millions) Net revenues $ 6,179.0 $ 6,168.6 0.2 % Cost of goods sold 2,663.3 2,619.8 1.7 % Gross profit $ 3,515.7 $ 3,548.8 (0.9) % Gross margin 56.9 % 57.5 % As compared to the same period in the prior year, currency translation unfavorably impacted gross profit by approximately $6 million.
Americas . Net revenues in our Americas segment increased on both reported and constant-currency bases, with currency affecting net revenues unfavorably by approximately $10 million. Constant-currency net revenues increased as a result of higher revenue across both our wholesale and DTC channels.
Americas . Net revenues in our Americas segment decreased on both reported and constant-currency bases, with currency affecting net revenues favorably by approximately $34 million. Constant-currency net revenues decreased as a result of lower revenue in our wholesale channel, partially offset by higher revenue in our DTC channels.
Some of these limitations include: • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect income tax payments that reduce cash available to us; • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness, which reduces cash available to us; 56 Table of Contents • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA exclude other income, which includes realized and unrealized gains and losses on our forward foreign exchange contracts and transaction gains and losses on our foreign exchange balances, although these items affect the amount and timing of cash available to us when these gains and losses are realized; • Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share exclude COVID-19 government subsidy gains, unrealized gains on marketable securities originating in prior years, and loss on early extinguishment of debt; • all of these non-GAAP financial measures exclude the expense resulting from the impact of changes in fair value on our cash-settled stock-based compensation awards; • all of these non-GAAP financial measures exclude COVID-19 related inventory costs and other charges, acquisition and integration charges, and restructuring and restructuring related charges, severance and other, net which can affect our current and future cash requirements; • all of these non-GAAP financial measures exclude certain other SG&A expense items, which include severance, transaction and deal related costs, including acquisition and integration costs which can affect our current and future cash requirements; • the expenses and other items that we exclude in our calculations of all of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from all of these non-GAAP financial measures or similarly titled measures; • Adjusted EBITDA excludes the recurring, non-cash expenses of depreciation of property and equipment and, although these are non-cash expenses, the assets being depreciated may need to be replaced in the future; and • Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share do not include all of the effects of income taxes and changes in income taxes reflected in net income.
Some of these limitations include: • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect income tax payments that reduce cash available to us; 58 Table of Contents • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness, which reduces cash available to us; • Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA exclude other income, which includes realized and unrealized gains and losses on our forward foreign exchange contracts and transaction gains and losses on our foreign exchange balances, although these items affect the amount and timing of cash available to us when these gains and losses are realized; • Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share exclude COVID-19 government subsidy gains, unrealized gains on marketable securities originating in prior years, and loss on early extinguishment of debt; • all of these non-GAAP financial measures exclude acquisition and integration charges, and restructuring and restructuring related charges, severance and other, net which can affect our current and future cash requirements; • all of these non-GAAP financial measures exclude certain other SG&A expense items, which include severance, transaction and deal related costs, including acquisition and integration costs which can affect our current and future cash requirements; • all of these non-GAAP financial measures exclude certain other SG&A expense items, which include non-cash property and equipment and right-of-use asset impairment charges.
Additionally, competition for, and price volatility of, resources throughout the supply chain have increased, resulting in higher product costs. Trends affecting the supply chain include fluctuating prices and inflationary pressures on labor and raw materials. Trends such as these can result in higher product costs and increased pressure to reduce costs and raise product prices.
Additionally, inflationary pressures, competition for, and price volatility of, resources throughout the supply chain have increased, resulting in higher labor and raw material costs. Trends such as these have and may continue to result in higher product costs and increased pressure to reduce costs and raise product prices, which could have a negative impact on demand.
We implemented price increases on many of our products in 2022 in an effort to mitigate the effect of higher costs. Inflation did not have a significant impact on our results of operations in 2021. If these inflationary pressures continue, our revenue, gross and operating margins and net income will be impacted in 2023.
We implemented price increases on many of our products in the latter half of 2022 in an effort to mitigate the effect of higher costs. If these inflationary pressures continue, our revenue, gross and operating margins and net income will be impacted in 2024.
Selling . Currency translation impacted selling expenses favorably by approximately $58 million for the year ended November 27, 2022.
Selling . Currency translation impacted selling expenses favorably by approximately $6 million for the year ended November 26, 2023.
The increase in selling expenses is primarily due to higher sales volume in the current year as compared to the prior year which included temporary store closures in certain markets as a result of the pandemic as well as higher labor costs in the current year as a result of inflation. Advertising and promotion .
The increase in selling expenses is primarily due to higher DTC sales volume in the current year as compared to the prior year as well as increased labor and store costs as a result of an increased number of stores and inflation. Advertising and promotion .
Compared to the fourth quarter of 2021, diluted earnings per share of $0.38 increased from $0.37 due to a decrease in weighted-average common shares outstanding resulting from incremental share repurchases in the current year partially offset with lower net income described above. • Adjusted diluted earnings per share.
Compared to the fourth quarter of 2022, diluted earnings per share of $0.32 decreased from $0.38 due to lower net income described above, partially offset by a decrease in weighted-average common shares outstanding. • Adjusted diluted earnings per share.
(3) For the year ended November 27, 2022, restructuring and restructuring related charges, severance and other, net includes $7.3 million of charges related to the Russia-Ukraine crisis. Other, net includes charges related to an international customs audit, transaction and deal related costs.
For the year ended November 27, 2022, restructuring and restructuring related charges, severance and other, net primarily includes net restructuring charges of $9.1 million and $7.3 million of charges related to the Russia-Ukraine crisis.
Currency translation unfavorably affected operating income in the segment by approximately $7 million as compared to the prior year.
Levi's Brands operating income . • Americas. Currency translation favorably affected operating income in the segment by approximately $10 million as compared to the prior year.
Our effective income tax rate was 12.4% for the year ended November 27, 2022, compared to 4.6% for the prior year.
Our effective income tax rate was 5.9% for the year ended November 26, 2023, compared to 12.4% for the prior year.
(2) For the year ended November 27, 2022, impairment charges and early termination gains, net include $4.1 million of property, plant and equipment, $11.6 million of goodwill and $33.3 million of certain store right-of-use assets, net of a $15.8 million on the early termination of store leases related to the Russia-Ukraine crisis.
For the year ended November 27, 2022, property, plant, equipment, right-of-use asset impairment, and early lease terminations, net primarily includes impairment of $4.1 million related to property, plant and equipment and $33.3 million related to certain store right-of-use assets offset by a $15.8 million gain on the early termination of store leases, all related to the Russia-Ukraine crisis.
Recently Issued Accounting Standards See Note 1 to our audited consolidated financial statements included in this report for recently issued accounting standards, including the expected dates of adoption and expected impact to our consolidated financial statements upon adoption. 66 Table of Contents
We classify interest and penalties related to income taxes as income tax expense. 70 Table of Contents Recently Issued Accounting Standards See Note 1 to our audited consolidated financial statements included in this report for recently issued accounting standards, including the expected dates of adoption and expected impact to our consolidated financial statements upon adoption. 71 Table of Contents

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of November 27, 2022 As of November 28, 2021 Average Forward Exchange Rate Notional Amount Fair Value Average Forward Exchange Rate Notional Amount Fair Value (Dollars in millions) Currency Australian Dollar 0.69 $ (2.8) $ 0.4 0.73 $ 20.7 $ 0.3 Brazilian Real 5.12 6.8 0.4 5.85 5.9 (0.1) Canadian Dollar 1.30 95.9 2.1 1.26 85.5 (0.5) Swiss Franc 0.93 (7.2) — 0.92 (15.2) (0.3) Chilean Peso 924.50 11.3 0.3 847.47 12.4 0.1 Czech Koruna 23.54 (1.3) — 22.03 (1.2) — Danish Krone 7.10 (1.4) — 6.44 (2.8) (0.1) Euro 1.08 (104.8) 9.9 1.17 169.9 10.4 British Pound Sterling 1.20 95.1 0.7 1.31 114.0 (2.4) Hong Kong Dollar 7.82 6.8 — 7.79 5.9 — Hungarian Forint 403.53 (3.4) — 316.9 (4.4) (0.1) Japanese Yen 126.47 31.7 1.4 108.21 73.1 3.5 South Korean Won 1,269.54 23.2 0.8 1,169.36 33.2 0.6 Mexican Peso 20.92 (17.2) (3.2) 21.32 46.8 2.1 Norwegian Krone 9.96 (1.0) — 8.59 (0.7) — New Zealand Dollar 0.62 (5.6) 0.1 0.7 (5.4) (0.1) Polish Zloty 4.61 1.6 — 4.08 (5.7) (0.1) Swedish Krona 10.04 16.3 0.5 8.69 26.3 1.0 Total $ 144.0 $ 13.4 $ 558.3 $ 14.3 68 Table of Contents Interest rate risk The following table provides information about our financial instruments that may be sensitive to changes in interest rates.
Biggest changeAs of November 26, 2023 As of November 27, 2022 Average Forward Exchange Rate Notional Amount Fair Value Average Forward Exchange Rate Notional Amount Fair Value (Dollars in millions) Currency Australian Dollar 0.67 $ 4.2 $ 0.7 0.69 $ (2.8) $ 0.4 Brazilian Real 5.21 5.1 (0.2) 5.12 6.8 0.4 Canadian Dollar 1.34 7.2 0.2 1.30 95.9 2.1 Swiss Franc 0.88 (19.1) 0.1 0.93 (7.2) — Chilean Peso 916.55 12.0 (0.4) 924.50 11.3 0.3 Czech Koruna 22.64 (1.0) — 23.54 (1.3) — Danish Krone 6.85 (1.6) — 7.10 (1.4) — Euro 1.10 62.5 5.5 1.08 (104.8) 9.9 British Pound Sterling 1.22 135.7 (2.0) 1.20 95.1 0.7 Hong Kong Dollar 7.80 2.8 — 7.82 6.8 — Hungarian Forint 351.37 (4.8) — 403.53 (3.4) — Japanese Yen 133.60 34.0 1.7 126.47 31.7 1.4 South Korean Won 1,299.63 — — 1,269.54 23.2 0.8 Mexican Peso 18.14 (20.3) (1.0) 20.92 (17.2) (3.2) Norwegian Krone 10.93 (1.4) — 9.96 (1.0) — New Zealand Dollar 0.60 (5.4) 0.1 0.62 (5.6) 0.1 Polish Zloty 4.03 (0.9) — 4.61 1.6 — Swedish Krona 10.36 (3.9) — 10.04 16.3 0.5 Total $ 205.1 $ 4.7 $ 144.0 $ 13.4 73 Table of Contents Interest rate risk The following table provides information about our financial instruments that may be sensitive to changes in interest rates.
A net positive notional amount represents a position to buy the U.S. Dollar versus the exposure currency, while a net negative notional amount represents a position to sell the U.S. Dollar versus the exposure currency. All transactions will mature before the end of February 2024.
A net positive notional amount represents a position to buy the U.S. Dollar versus the exposure currency, while a net negative notional amount represents a position to sell the U.S. Dollar versus the exposure currency. All transactions will mature before the end of February 2025.
In addition, we have International Swaps and Derivatives Association, Inc. ("ISDA") master agreements in place with our counterparties to mitigate the credit risk related to the outstanding derivatives.
In addition, we have International Swaps and Derivatives Association, Inc. (“ISDA”) master agreements in place with our counterparties to mitigate the credit risk related to the outstanding derivatives.
As of November 27, 2022 As of November 28, 2021 Total Expected Maturity Date 2023 2024 2025 2026 2027 Thereafter Total (Dollars in millions) Debt Instruments Fixed Rate (US$) $ — $ — $ — $ — $ — $ 500.0 $ 500.0 $ 500.0 Average Interest Rate — — — — — 3.50 % 3.50 % 3.50 % Fixed Rate (Euro 475 million) — — — — 494.5 — 494.5 532.3 Average Interest Rate — — — — 3.375 % — % 3.375 % 3.375 % Variable Rate (US$) — — — — — — — — Average Interest Rate — — — — — — — — Total Principal (face amount) of our debt instruments (1) $ — $ — $ — $ — $ 494.5 $ 500.0 $ 994.5 $ 1,032.3 ______________ (1) Excluded from this table are other short-term borrowings of $11.7 million as of November 27, 2022, consisting of term loans and revolving credit facilities at various foreign subsidiaries which we expect to either pay over the next 12 months or refinance at the end of their applicable terms.
As of November 26, 2023 As of November 27, 2022 Total Expected Maturity Date 2024 2025 2026 2027 2028 Thereafter Total (Dollars in millions) Debt Instruments Fixed Rate (US$) $ — $ — $ — $ — $ — $ 500.0 $ 500.0 $ 500.0 Average Interest Rate — — — — — 3.50 % 3.50 % 3.50 % Fixed Rate (Euro 475 million) — — — 517.8 — — 517.8 494.5 Average Interest Rate — — — 3.375 % — — 3.375 % 3.375 % Variable Rate (US$) — — — — — — — — Average Interest Rate — — — — — — — — Total Principal (face amount) of our debt instruments (1) $ — $ — $ — $ 517.8 $ — $ 500.0 $ 1,017.8 $ 994.5 ______________ (1) Excluded from this table are other short-term borrowings of $12.5 million as of November 26, 2023, consisting of term loans and revolving credit facilities at various foreign subsidiaries which we expect to either pay over the next 12 months or refinance at the end of their applicable terms.
These agreements provide the legal basis for over-the-counter transactions in many of the world's commodity and financial markets. 67 Table of Contents The following table presents the currency, average forward exchange rate, notional amount and fair values for our outstanding forward contracts as of November 27, 2022 and November 28, 2021.
These agreements provide the legal basis for over-the-counter transactions in many of the world's commodity and financial markets. 72 Table of Contents The following table presents the currency, average forward exchange rate, notional amount and fair values for our outstanding forward contracts as of November 26, 2023 and November 27, 2022.
As of November 27, 2022, we had forward foreign exchange contracts, of which $649.7 million were contracts to buy and $505.7 million were contracts to sell various foreign currencies. These contracts are at various exchange rates and expire at various dates through February 2024.
As of November 27, 2022, we had forward foreign exchange contracts to buy $649.7 million and to sell $505.7 million against various foreign currencies. These contracts were at various exchange rates and expire at various dates through February 2024. Derivative Financial Instruments We are exposed to market risk primarily related to foreign currencies.
All of the $11.7 million was fixed-rate debt. 69 Table of Contents
All of the $12.5 million was fixed-rate debt. 74 Table of Contents
As of November 28, 2021, we had forward foreign exchange contracts to buy $952.4 million and to sell $394.1 million against various foreign currencies. These contracts were at various exchange rates and expire at various dates through February 2023. Derivative Financial Instruments We are exposed to market risk primarily related to foreign currencies.
As of November 26, 2023, we had forward foreign exchange contracts, of which $946.3 million were contracts to buy and $741.1 million were contracts to sell various foreign currencies. These contracts are at various exchange rates and expire at various dates through February 2025.

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