Levi’s May quarter-end results included a more moderate decline in U.S. wholesale shipments and a double-digit increase in direct-to-consumer (DTC) sales. On brand strategy, new CEO Michelle Gass (previously Kohl’s CEO) said the following:
“We continue to make meaningful market share gains in the U.S., driving growth with women and our key youth target group of 18- to 30-year olds, while maintaining our dominant leadership position in men's...We continue to drive brand heat and impactful storytelling by showing up at the center of culture across music, art and design, fashion and sports. We were thrilled and honored to have Beyoncé name a song after us on her newest album. And as an example of our agility, we responded to the speed of culture, not only demonstrating our understanding of engaging social communities in an authentic way, but also generating more than 3B impressions and a ton of buzz for the brand that remains today. We activated in a big way at Coachella and Stagecoach music festivals and launched collaborations with ERL, Stüssy and Starter. We continue to lead the global trend around straight, loose and wide leg bottoms, now comprising more than 50% of our overall bottoms assortment, loose fits grew 21% across channels in Q2...Our original icon, the 501, continues to deliver impressive growth, up 16% in DTC in Q2. Our strategic focus around denim dressing continues to gain traction is becoming a more meaningful part of our portfolio and is expanding our total addressable market opportunity. Denim dressing continues to perform very well with denim dresses, skirts and jumpsuits, again up triple digits in the quarter...The growing popularity of Western wear is at an all-time high, and our fans continue to choose from our collection of timeless yet fresh Western-inspired pieces. This includes our iconic Western shirts, which are seeing particularly strong sales in women's up 40%. (Thanks to both Beyoncé and Taylor Swift.)
On Levi’s stores, sales increased double-digits, and the expectation is momentum to continue in the summer and fall given that denim is hot and Levi’s will have a lot of new product (such as denim dresses and skirts) flowing onto shelves. The new product flow is expected to drive improvement in the wholesale business as well. Levi’s U.S. women’s business was up over 20% across both bottoms and tops in the quarter. Western is also trending very strong, as noted above, with its denim market up +40% overall. The chart below shows building visitation for Levi’s full-price and outlet stores.
Influencer-heavy Los Angeles shows outstanding gains for Boot Barn (which we use as a proxy for the “Western” category).
