Beyoncé’s recent music album features a lyric that mentions “denim layering.”
Customers of Levi Strauss are wholeheartedly embracing this trend, much to the joy of the company’s leadership.
An increase in Western-inspired clothing has led consumers to experiment with complete denim outfits, as stated by the long-standing denim powerhouse. This newfound excitement is notably boosting sales of denim blouses, skirts, and gowns, which were previously overshadowed by the popularity of regular jeans.
“We are witnessing an unprecedented embrace of Western style,” CEO Michelle Gass expressed during a conversation with analysts on Wednesday night, subsequent to the quarterly results announcement for the period ending in May.
The resurgence of Western fashion has been brewing for a while now, sparking a demand for pieces such as denim trousers, cowboy footwear, and headgear. The company struck gold when Beyoncé referenced its denim brand in her track “Levii’s Jeans” earlier this year.
The revival of cowgirl and cowboy aesthetics has received a further push from recent collections by luxury fashion label Louis Vuitton and the popular Eras Tour featuring Taylor Swift.
Upon assuming the position of Levi Strauss CEO earlier this year following her time as CEO at Kohl’s, Gass is celebrating denim’s current popularity and the wider cultural shift towards Western fashions.
As per the figures shared during the earnings meeting, Levi Strauss is seizing the opportunity presented by the growing interest in denim, seeing a significant rise in sales of denim skirts, jumpsuits, and gowns in the latest quarter, as stated by Gass. She also pointed out a noticeable surge in Western blouse sales, particularly in women’s wear.
Gass portrays the change in approach as dressing their patrons in denim from top to bottom, moving away from their usual focus on jeans. Speaking on CNBC’s “Mad Money,” she commented on the increasing popularity of denim skirts and gowns, which, though not traditionally associated with Levi, are now showing remarkable growth.
Denim Trends Challenge Wall Street Expectations
Despite the undeniable denim movement, the results don’t seem to be translating into success on Wall Street. Levi Strauss’s stocks plummeted over 15% on Thursday following the latest financial update, marking one of their worst performances since their public offering in 2019.
The company reported revenues of $1.44 billion in the second fiscal quarter, slightly falling short of the $1.45 billion estimated by analysts surveyed by LSEG, despite the robust demand for denim. The CFO informed CNBC that the minor shortfall was due to adverse currency exchange rates and weaker performance from the Dockers label.
On the flip side, Levi Strauss surpassed expectations with earnings of 16 cents per share, excluding specific expenses, exceeding the analysts’ anticipated 11 cents per share.
Even though there was a recent decline, Levi’s shares have still seen a considerable increase of more than 18% in the last year, outperforming the stocks of Kontoor Brands, the parent company of Wrangler and Lee, which saw growth of 5%.
Wells Fargo analyst Ike Boruchow remarked that for “one of the most overbought names in the sector presently,” Levi’s second-quarter outcomes were disappointing. In essence, the company didn’t meet the high expectations set for them, he mentioned.
Citigroup analyst Paul Lejuez acknowledged the positives from the quarter but expressed worries about wholesale activities and possibly weak sales in Europe for the remainder of the year.
Lejuez highlighted several positive aspects for the company’s future stock performance, including fresh designs and fits—typical triggers of excitement in the fashion sector. Additionally, he introduced an interesting element to the mix: the impact of Beyoncé.
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