Denim heads are buying directly from Levi’s.
Levi Strauss stock was up 7% in after-hours trading Wednesday following the company’s latest earnings report. It continued to rise Thursday morning, up more than 11% in pre-market trading.
“We are continuing to see strength in our direct-to-consumer [DTC] business,” said Michelle Gass, Levi’s CEO, during the company’s earnings call on Wednesday. DTC sales are up across all of the company’s segments, she added.
The jean company is now making almost half (48%) of its DTC sales through its online marketplace and brick-and-mortar locations.
According to Gass, it is “crucial” that Levi’s leverages its DTC channel, which may be in contrast to the retailer’s reliance on wholesalers like Macy’s and Kohl’s to propel its business.
And shoppers are purchasing baggier clothes, Gass said. DTC sales show that women are buying more denim skirts, jumpsuits, and low-rise and bootcut jeans (goodbye skinny jeans). Men are buying more loose-fitting jeans too, she added.
Although baggy denim may be having a moment, Gass did not confirm whether Beyonce’s new song “Levii’s Jeans” led to a boost.
Overall, the jeans maker modestly surpassed Wall Street’s expectations. Levi’s reported revenue of $1.56 billion, about 0.26 cents per share. Analysts had forecasted it would generate revenue of $1.54 billion, roughly 0.21 cents per share.
San Francisco-based Levi’s reported a loss of $10.6 million in its fiscal first quarter. That was in part led by the exit from its Denizen brand and its workforce reduction in February.
During that month, Levi’s company said it would be laying off 10% to 15% of employees to address cost structure. As part of the layoffs, Levi’s incurred restructuring charges primarily related to severance and post-employment benefit charges.
Levi’s updated its fiscal 2024 outlook as it prepares to deal with waning consumer spending led by stubborn inflation. The retailer expects full-year sales to increase between 1% and 3%.
The retailer, however, expects profits to rise. It updated its adjusted earnings per share to be between $1.17 and $1.27. Its previous estimate was between $1.15 to $1.25.
Levi’s has about 500 stores worldwide. Gass said the company plans to open new stores in Asia and one new flagship store in Paris ahead of the 2024 Summer Olympics.
