Hello, welcome to the Annual Meeting of Shareholders of Levi Strauss & Company. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions at any time by clicking on the message icon. Please note, your full name will be announced along with your question. Guests are in listen- in only mode and will not be able to submit questions. It is now my pleasure to turn today's meeting over to Mr. Bob Eckert, Chairperson of Levi Strauss & Co. Mr. Eckert, the floor is yours.
Good morning. I'm Bob Eckert. I welcome all of you to Levi Strauss & Company's 2021 Annual Meeting of Shareholders. I want to thank all of you for taking the time to join us. I hope you're safe and well. While the meeting is virtual only, shareholders that have completed an online registration will have the capability to submit questions online. Guests attending this meeting are in listen mode only. Before we begin, I'd like to thank Steve Neal for his many years of service to the Board and the company, including his 10 years of service as our Board Chair. Steve reached our mandatory Board retirement age earlier this year. Throughout his years on the Board, he served with distinction and excellence. He has been a critical part of Levi Strauss & Company's rise to global leadership.
We'll miss Steve. But, we know that he has helped set up the company for continued great success. This is my first shareholder meeting as Chair of Levi's. I've had the pleasure of serving on the Board of Directors for 11 years before becoming the Chair earlier this year in March. From my many years on the Board, I've gotten to see this company up close. I have the utmost confidence in the business and its future growth. Our brand has deep and meaningful connections with consumers globally. We have an exceptional team that makes it all possible. I look forward to working with the Board and Management team to serve all shareholders and increase shareholder value over the coming years. At this time, let me take this opportunity to introduce you to the members of the Levi Strauss & Company Board, shown on the screen.
In addition to myself, they are Chip Bergh, President and CEO of Levi Strauss & Company, Troy Alstead, Jill Beraud, Spencer Fleischer, David Friedman, Yael Garten, Chris McCormick, Jenny Ming, Pat Pineda, Joshua Prime, and Elliott Rodgers. I'd like to thank our Board members for their dedication and willingness to serve. All of them are online, as well as members of our management team. In a few minutes, you'll hear from our President and CEO, Chip Bergh, Chief Financial Officer, Harmit Singh, and our General Counsel, Seth Jaffe. In the meantime, let's begin with the agenda. The agenda will essentially have two parts. We'll start with the formal portion of the meeting to satisfy legal requirements. After the formal portion of the meeting, we'll move to the second part of the meeting for the business updates from management.
With that, let me turn the meeting over to our General Counsel, Seth Jaffe, for the formal business of the meeting. Seth?
Thank you, Bob, and good morning, everyone. It's great to be here again with you virtually. Just a few reminders before I go into the proposals. First, this meeting is being recorded and will be available for the next 30 days on the meeting center site you accessed today. Second, shareholders who have not previously voted their shares and who have previously completed an online registration may vote online prior to the closing of the polls. The polls will be closed for voting after I go through each of the proposals to be voted on. Our business review will include forward-looking statements. This is a standard reminder that actual results could differ from those presented today.
You should refer to our filings with the SEC, including our annual report and the quarterly report that we filed on April 8th, for certain risk factors that could lead to actual results that differ from our projections. We'll move to the formal business. A representative from Broadridge, who is acting as Inspector of Election, is present online. The Inspector of Election has reported that a majority of the votes eligible to be cast at this meeting are present or represented by proxy. We have a quorum, and we may proceed. There are three proposals to be considered today.
The first is the election of four Class II Directors to serve until the 2024 annual meeting and until their successors are duly elected and qualified. The nominees for Class II Director are David Friedman, Yael Garten, Jenny Ming, and Joshua Prime. The second item of business is the proposal to approve, on an advisory basis, the compensation paid to the company's named executive officers as set forth in more detail in the proxy statement for this meeting. The third item of business is the ratification of the selection by the audit committee of the Board of Directors of PricewaterhouseCoopers LLP as the company's Independent Registered Public Accounting firm for the fiscal year ending November 28th, 2021. I now declare the polls closed.
The Inspector of Elections has provided us with preliminary results and confirmed that we have received the necessary votes required to pass the following. One, each of the four nominees for election as Class II Directors has been elected to serve a three-year term expiring at the 2024 annual meeting. Two, the advisory approval of executive compensation has passed.
Three, the appointment of PricewaterhouseCoopers as the Independent Registered Public Accounting firm for Levi Strauss & Co has been ratified. This concludes the formal portion of the meeting. Chip Bergh will now provide a business update. Chip?
Good morning, everyone, and thank you for joining us today. I hope everyone is safe and healthy. I'd also like to begin by thanking Steve Neal for his partnership over the last decade as our Board Chair. Steve has been instrumental to our successful turnaround, including playing a key role in taking the company public. He's guided us through countless strategic directions and has supported me and the management team, along with our values every step of the way. Steve, we will miss having you around. At last year's annual shareholder meeting, I remarked on the great uncertainty that lay ahead of us as we were in the early days of the pandemic. I never thought that we'd still be dealing with it one year later, but Levi Strauss & Company stepped up to the challenge.
We leaned into our strengths and values, focused on what we could control, and continued to manage the business for the long term. We not only endured, but we are currently emerging stronger. I'm so grateful to our executive leadership team who is with us here today virtually. They are my collaborators, counselors, teammates, and friends. We push each other, we get the best out of one another, and over the past year, they have led with empathy and grit for the good of the company and all of its stakeholders. I also want to recognize our employees who have been instrumental to our success in navigating the uncertainty and challenges of this past year. Our retail teams, factory employees, and distribution center workers around the world demonstrated particular dedication and innovation beyond what any of us could have expected.
After initially closing our stores when the pandemic hit, our retail teams implemented comprehensive health and safety measures, enabling us to reopen stores while keeping staff and consumers safe. We doubled down on our investments in people by extending our paid sick leave policy to all part-time hourly workers, and we introduced paid family leave for all benefits-eligible employees. I want to recognize the Red Tab Foundation, our employee helping employee assistance fund, which provided over $2 million to help LS & Co employees and retirees facing hardship in the moments they needed it most. The pandemic and the economic fallout provided a gut-check moment, but we did not flinch. Instead, we doubled down on our strategic priorities and increased our focus on how to not just survive, but to emerge a stronger, more profitable company, all without compromising investment in the company's long-term growth and sustainability.
We evolved our key strategic priorities into the following areas that will continue to guide us in 2021 and beyond. First, lead with the greatest asset we have, the Levi's brand. The number one global denim brand boasting unmatched authenticity and heritage after 168 years in business. We're deepening our consumer connections, putting consumers at the heart of everything we do. We're leading trends, launching innovative products, maintaining the brand at the center of culture, and collaborating with the biggest names to drive brand heat. We're leading with our values and continuing to stand up for what's right. Attributes consumers are increasingly looking for in the brands they shop. We continue to lead on sustainability, developing industry-leading production practices, leaning into the recommerce movement, and championing our values in our marketing.
This week, our new Buy Better, Wear Longer global marketing campaign launches, nudging our fans towards more conscious consumption. Second, we are thinking direct to consumer first. In 2020, our DTC business was 39% of total company revenues, with our owned e-commerce business comprising 21% of DTC revenues. Our e-commerce business grew 29% in 2020 as consumers increasingly shifted to online shopping, and it is now profitable on a fully loaded basis. We accelerated launching a number of omni-channel initiatives in the pandemic to meet consumer needs, services like ship from store and buy online pickup in store or curbside. We continue to open new retail doors globally, leading with our NextGen retail store format that delivers an exceptional consumer experience. Our third strategic focus is to continue to diversify across channels, geographies, and categories.
As you can see on this slide, we've made considerable progress since 2015. Over the next decade, we expect to continue driving outsized growth in under-penetrated areas.
International is headed to 2/3 of our business. Women's is on the way to becoming 1/2. DTC could be as much as 60%. The total digital ecosystem, including both our own e-commerce sales and the digital sales of our wholesale customers, will be more than 1/3 of our revenues. Tops and other categories beyond denim bottoms, such as accessories, footwear, and chinos, should comprise 1/2 of our revenues. Through this strategy, we'll reach new segments of the market, growing share of closet and delivering additional value to consumers, making us stronger and more resilient for the future. Our success will be driven not just by what we do, but by how we do it. Our enterprise-wide digital transformation will enhance our ability to deliver a superior consumer experience, increase efficiency, reduce costs, and drive profitable growth.
We're investing in digital and artificial intelligence tools to power our ways of working, streamline our global supply chain, and optimize promotions and assortment planning. We're also upgrading our enterprise resource planning system, automating and digitizing processes while linking our enterprise systems in a seamless manner, creating a more simplified work environment. These efforts will all help us shorten our go-to-market timeline, improve margins, and increase profitability. Through this challenging time, we've stayed true to the values that have consistently put us, and put this company, on the right side of history. Last summer, in response to the reckoning with structural racism in this country, we took a hard look in the mirror. We released our demographic representation data for the first time and are committed to updating this data publicly on an annual basis.
We're committed to cultivating a diverse and inclusive workplace because we know a diverse organization will outperform every time. As part of this effort, we hired our first Chief Diversity, Equity, and Inclusion Officer, Elizabeth Morrison. We added DEI targets as a component of long-term compensation for executive leaders in the company, and we conducted a pay equity study, which I'm pleased to say, found no systemic pay differences across gender and ethnicity. We helped to expand voter participation, working with Patagonia and PayPal to rally nearly 2,000 companies to join the Time to Vote initiative, committing to give time off to vote in the 2020 election to their collective more than 10 million employees. We continue to be focused on the threat that climate change poses to our business.
We've made progress on our sustainability strategies to reduce our emissions and reduce the impact of our operations, including through our industry-leading Water<Less program and efforts to expand our use of recycled materials. Our commitment to profits through principles helped us successfully navigate the challenges 2020 threw at us, and it will carry us forward into the years ahead. With that, I'll turn it over to Harmit. Harmit?
Thanks, Chip. Good morning to all of you. I'm pleased with our financial progress, even during the toughest year in my 35 years as a professional. Our financial strategies are underpinned by four areas of focus and continue to work even in tough times. During the pandemic, we have already raised the bar on profits and cash, taking costs out of the organization while not sacrificing investment, and have improved working capital by making cash a key factor, and the company has really gotten on the bandwagon on this. We are putting our money where our mouth is as we are bonused on revenues, profits, and cash in 2021. While we would not have wished for these circumstances, we have taken the opportunity during the pandemic to take hard decisions in order to emerge stronger. Our performance over the past four quarters bears this out.
From a revenue perspective, our most impacted quarter was Q2 a year ago, when most of our stores around the globe were closed for 10 weeks of the quarter. Since then, we have steadily improved sequentially each quarter as we make our way back to pre-pandemic revenues, which we expect we'll achieve in quarter four of this year. Adjusted gross margin has benefited from our tight inventory management, trend-right products, improving quality of our customer mix, channel shift, and pricing actions behind the strength of the brand, raising gross margin to an all-time high each of the past two quarters. From a profit perspective, our expanding gross margin, in combination with the focus on cash and cost, enable us to only have one unprofitable quarter despite the significant impact on revenues due to the pandemic. In the quarter we just reported, adjusted EBIT margins crossed 13%.
As I just shared, we expect to be back to pre-pandemic revenues by the fourth quarter of this year. As we exit 2021, we expect a revenue trajectory of growth compared to 2019, with adjusted gross margins more than 200 basis points above 2019 levels. SG&A at the end of 2021 around 2019 levels, despite the increased investments we made over the last two years in e-commerce, omni, AI, data, and 250 more company-operated doors than we had in 2019. Funded by the cost cuts we have taken, which we accelerated in response to the pandemic. These will yield adjusted EBIT margins above 12%, a target we already had pre-pandemic, although a couple of years away at that time. Now it will be realized sooner.
From a balance sheet perspective, we shored up liquidity early to ensure our survival, raising half a billion dollars last April when visibility was very low. Based on our strong cash flows and the sequential recovery I discussed a moment ago, we felt comfortable to pay back $300 million last month and expect to pay back the remaining $200 million later in the year. With this, in combination with our improving profitability, we anticipate to exit 2021 with a leverage ratio moving back towards 2019 levels and on its way to surpassing them. We also refinanced $500 million of our 5% debt in February, obtaining a much lower coupon of 3.5%, which will save us $20 million annually in interest expense. Capital deployment to drive growth remains our top priority for cash. As I mentioned, we did not sacrifice investment during the pandemic. Rather, we accelerated it.
Returning cash to shareholder also remains a priority. While we prudently suspended dividends at the start of the pandemic, we reinstated them after two quarters, raised them this quarter, and will look to raise them further as business conditions improve. All these actions fuel my confidence that we are exiting the pandemic a much stronger, more profitable, more cash generative, and more valuable company than we entered it. Investors are clearly seeing the value we are creating. This is also evidenced by our stock price and our growth of our TSR over the last three years, two years, and one year.
We have created significant shareholder value since the IPO two years ago. Overall, the market cap of this wonderful company, which is close to $11 billion today, has increased by 50% from the IPO price and more than 800% over the last decade. Back over to you, Chip.
Now I think we can open the meeting. Question? Thank you, Harmit. Now I think we can open the meeting to questions from our shareholders. We'll answer as many questions as we can during the meeting. For now, I will turn it over to Aida Orphan, our Senior Director of Shareholder Relations, who will moderate the Q&A and explain to you how you can post questions in the chat online. Aida?
Thanks, Chip. As a reminder to those on the call, if you haven't already submitted a question, you may do so at any time by clicking on the message icon. Our first question is from Jim Piazza. His question is, Why is the CEO of Levi expressing his view regarding Biden's gun control bill?
Well, thank you for the question. We made the decision way back in 2018 to step off the sidelines and do everything in our power to support the gun safety movement, in part because it is a defining issue for young Americans today. The gun violence epidemic in America is tearing American communities apart. The crisis, as we've experienced just in the past couple of weeks, has only gotten worse in the face of inaction from our leaders. Every day, 100 Americans are killed by guns, and hundreds more are injured. Every year, 136,000 Americans are shot. This includes mass shootings, suicides, domestic abuse cases, urban violence, and accidental gun deaths. From the recent tragedies in Indianapolis, Atlanta, and Boulder, to the ongoing devastation of everyday gun violence, we need to take action now more than ever before.
President Biden's announcement is encouraging. We stand ready to support him as he puts forward his gun safety agenda. We also hope that his executive action will be matched by legislative action in Congress. Over 90% of Americans support background check legislation. We can't wait any longer to pass this common sense step that will save lives. I will also say is broadly supported by gun owners as well. Business leaders have a responsibility to ensure the safety of their employees, their customers, and their communities. We will keep at this fight for as long as it takes. I believe it's our duty.
Our next. Kent Stein on behalf of People for the Ethical Treatment of Animals, PETA. Levi's claims to be sourcing more sustainable materials, but using animals is anything but sustainable, as leather production creates massive amounts of the carbon emissions that contribute to climate change. The company's use of leather is especially unnecessary since most of its jeans already have non-leather. When will Levi's end its use of cruelly obtained, unsustainable leather patches?
Thank you for this question. I think we were asked a similar question about a year ago. I want to start by saying we are committed to sourcing all the materials used in our products in a responsible and environmentally sustainable manner, and that includes leather. The overwhelming majority of materials used in our products today are not animal-derived. Cotton alone represents about 90% of the materials used in our products, and the majority of our patches, as you acknowledge in the question, are also made from materials other than leather. The small amount of leather that we do use is sourced consistent with the best practices in animal welfare and environmental stewardship. Having said that, we also continue to do our diligence on material innovations that can deliver measurable environmental impact reductions at scale, including leather alternatives.
We've prioritized investment in cotton innovations and alternatives like Cottonized Hemp and Circulose by Renewcell, which represent the greatest potential impacts for the environment and our business, given the sheer scale of our cotton sourcing relative to other materials.
Our next question is from Davis Soderberg with the National Center for Public Policy. CEO Chip Bergh has said that the Georgia voter integrity legislation is racist and represents a significant step backwards for us in the United States. Can you, Mr. Bergh, explain specifically how requiring voters to show ID for fraud is racist, and also your timeline for ending all Levi Strauss requests for ID from job candidates, employees, visitors to your facilities, and attendees at your annual shareholder meetings in conformance with your race-based?
I think it's important we step back because I think there are some things that all Americans should be able to agree on. First and foremost, that voting is not a partisan issue, that it's an American issue, that the right to vote is central to democracy. I like to say a democracy only works if every eligible voter votes, and we must come together as a country to protect that right. Democracy needs to work around a free, fair, and equitable access to the polls. As a company, we've been focused on voting and access to voting since before the midterm elections in 2018. We participated in an organization called timetovote.org with PayPal and Patagonia and enlisted over 2,000 companies to join us in giving employees time off to vote on Election Day.
The 2020 election had the most Americans vote than any prior election, and it had the highest percentage of eligible voters voting in 120 years. Definitively, it has been one of the safest and most secure elections in the history of voting in this country. Any step backwards is a step away from democracy. Our focus has been advocating for voting rights and civic participation, and actively supporting organizations that are working to dismantle barriers to voting designed to disenfranchise communities of color and others in low-income areas. We need to do more. For us, that includes ensuring our advocacy and grant-making focused on voting addresses the wave of discriminatory laws in states like Georgia, but also in states where we have large populations of employees, like Texas, Florida, Mississippi, and Kentucky.
Right now, there are more than 350 bills moving in 47 states that are designed to restrict voting access. These bills are racist and undemocratic. By the way, I've never said anything about voter ID. We are focused and joined with more than 170 other companies in signing on to business statements from the Civic Alliance, calling on lawmakers around the country to set aside partisan politics and work together to pass laws that make voting safe and accessible to everyone. We're supporting federal legislation like the John Lewis Voting Rights Advancement Act to ensure that all voters can participate in their democracy free from discrimination.
Okay, it appears there are no additional questions. I'll now turn it over to Bob Eckert to close the meeting.
Thank you, Aida. I declare that the business of today's meeting is concluded. Thank you all very much for joining us this morning or afternoon. Appreciate your interest and your continued confidence in Levi Strauss & Company.