Levi’s revenues for Q1 ended Feb. 25 fell 7.8 percent to $1.6 billion from $1.7 billion, but Michelle Gass, president and chief executive officer of Levi Strauss & Co., said bluer skies are ahead for the denim category.
“I’d say we’re feeling better about the consumer than we did three to six months ago,” Gass said during the earnings call, adding that the company is seeing evidence that the denim category and the U.S. market is stabilizing after several years of volatility.
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The recently named “most trustworthy” brand, according to a Newsweek and Statista report, is making progress in its key use target, gaining share with 18- to 30-year-olds in the past quarter. Levi’s picked up share with the middle-income consumer, which is critical given these are the largest consumers of the category, the former Kohl’s Corp. chief said.
“We are continuing to outperform the category with higher-income consumers, demonstrating the success of our efforts in elevating the brand,” she said. “Market share growth is being driven by the exciting innovation we are bringing to the category as well as our ongoing commitment to keeping the brand at the center of culture, driving deep connections with fans around the world.”
The denim products driving this stabilization are a mixed bag of core and trend, including low rise and wider leg openings.
“A clear barometer for the strength of our core business, the 501, was up 23 percent in DTC, on top of 32 percent growth in the prior year. We’re seeing strength in loose fits for men and women, both up more than 40 percent in the quarter,” Gass said.
Meanwhile, sales for the six new baggy styles for women were up 50 percent in the quarter.
“Within denim, we’re feeling good, and I think you can look around…it’s a denim moment. I mean a lot is happening in denim and for Levi, we’re at the top,” Gass said. “We’re driving the trends.”
One of those moments is the release of “Levii’s Jeans,” Beyoncé’s denim-focused duet with Post Malone on her new album “Cowboy Carter.”
“One of the things that really is significant about the Levi’s brand, and we place a lot of emphasis and investment in making sure that Levi’s brand remains in the center of culture. And I don’t think there’s any better evidence or proof point than having someone like Beyoncé, who is a culture shaper to actually name a song after us,” Gass said.
Intrigue in “Cowboy Carter”-inspired Western fashion and brands are ramping up interest in double-denim looks. Gass added that Levi’s sees an “incredible opportunity to own the head-to-toe denim apparel lifestyle” and is addressing the space with denim skirts, dresses and jumpsuits, which increased triple digits in the quarter.
“We are also seeing strength in our denim tops assortment with our iconic women’s Westerns up more than 40 percent,” she said. “Looking forward, we are leaning into this opportunity, and we’re introducing new denim top silhouettes across blouses, corsets, vests and more.”
The brand is focused on building out “core essential” categories like T-shirts, wovens and polos to provide a perfect pairing to denim bottoms as well. Gass said new leadership hires, including the newly created role of vice president tops design, will be critical in setting the design direction for Levi’s tops.
Looking ahead the exec said Levi’s is focused on performance-driven products. The brand recently launched its first active tech pant, a men’s four-way stretch polyester pant engineered for movement. Gass said demand for the product is stronger than expected in both wholesale and DTC.
The brand is also preparing for hot summer temperatures with more products with Performance Cool, an innovation that started to solve the need in Asia with warm temperatures, and lightweight denim options.
“When the season got really hot [last year], we didn’t have enough offerings to satisfy that need,” Gass said. “We’re now expanding Performance Cool around the world, which we expect is going to really help our year as we look ahead.”
