Levi Strauss & Co. is hitting its stride after a 12 months of COVID-19-driven change.
“We’re seeing a really strong recovery, it gives us a lot of confidence going forward,” Chip Bergh, chief govt officer, informed WWD after the corporate posted large second-quarter gross sales and revenue features.
Not solely are gross sales perking again up as COVID-19 restrictions elevate in very important shopper markets within the U.S. and Europe, however a couple of key traits are bringing the market proper into Levi’s candy spot.
“During the pandemic about 35 percent of consumers changed waist sizes either up or down,” Bergh mentioned. “That gives people a reason to go out and update their wardrobe.”
And once they go to make that replace, they’re turning to extra informal seems, a continuation of a long-standing pattern, and denim, a class that ebbs and flows.
“We really are seeing evidence of a new denim cycle here,” mentioned Bergh, noting gross sales of denim seems have been outpacing attire by a number of factors. “Denim is definitely a go-to category for [consumers] as they’re emerging” from pandemic lockdowns.
And it’s a looser look that’s ruling now.
“This trend toward looser, baggier fits is a trend that we led going back to the pre-pandemic period when we launched the high-rise balloon pant,” Bergh mentioned. “That’s kind of a responsibility that we have [as the leading denim brand] and we’ve just doubled down on that.”
The model has additionally been constructing within the space of sustainability with quite a few initiatives — from efforts to chop down on water utilization to promoting secondhand — and has a brand new promoting tenting with the tagline: Buy Better, Wear Longer.
“This notion of buy better, wear longer is an idea that Levi’s has an opportunity to kind of own,” he mentioned.
The emphasis — on fashion, promoting and different extra run of the mill pursuits typical of vogue’s C-suite — present simply how a lot has modified since a 12 months in the past, when the trade was in disaster and struggling by way of the primary, dramatic COVID-19 lockdowns.
Levi’s internet earnings tallied $65 million for the second quarter ended May 30, an enormous enchancment from the $364 million loss a 12 months earlier when COVID-19 had shops closed and types of every type scrambling.
Adjusted earnings per share got here in at 23 cents, handily beating the 9 cents Wall Street had penciled in.
Sales for the quarter jumped 156 % to $1.3 billion from $498 million a 12 months earlier. In the Americas, gross sales grew 283 % to $715 million, whereas Europe was up 183 % to $365 million and Asia gained 128 % to $196 million.
The pandemic continues to be weighing on Levi’s, with 8 % of its shops at the moment closed attributable to well being restrictions. But the corporate right this moment is significantly completely different than it was in the beginning of 2020 — trimmed down, streamlined and extra digital and extra instantly linked with shoppers.
Levi’s e-commerce gross sales had been up 42 % even with shops reopening for the quarter. Including third-party web sites, Levi’s e-commerce gross sales rose 75 % for the quarter.
Levi’s upped its outlook for the second half and is now on the lookout for gross sales development of 28 % to 29 % from a 12 months earlier, or a rise of 4 % to five % from the identical interval in 2019.
Harmit Singh, chief monetary officer, mentioned Levi’s was structurally a “much stronger business” than it was earlier than the pandemic, with extra digital gross sales, stronger gross margins and a more healthy U.S. wholesaler enterprise that’s “growing with the winners” of the retail set.
Singh additionally pointed to the corporate’s “very strong” steadiness sheet.
“We have access to about $2 billion of capital,” Singh mentioned. “It allows us to do a few things, which is, grow the business organically as well as grow the business inorganically” and return cash to shareholders.
That opens the door a bit wider, maybe, to a possible acquisition — one thing Levi’s high brass has all the time mentioned was a risk, however one which appeared extra distant previously.
Levi’s is believed to be taking a tough have a look at its portfolio.
WWD reported in May that the corporate was near promoting its Dockers model to Bluestar Alliance, in response to market sources.
Bergh declined to touch upon the rumor.
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