Beyoncé’s recent album includes a reference to “denim on denim, on denim, on denim,” demonstrating the lasting popularity of this fashion essential.
Consumers of Levi Strauss are wholeheartedly embracing this trend, much to the delight of the company’s leadership.
An increase in Western-inspired clothing has encouraged shoppers to mix and match full-denim ensembles, a change that has notably boosted sales of denim tops, skirts, and dresses, previously overshadowed by conventional jeans.
“The upsurge in Western fashion is achieving record numbers,” stated CEO Michelle Gass during a recent analyst meeting discussing the quarter results ending in May.
The comeback of Western styles has been gaining traction, leading to a growing interest in items like denim trousers, cowboy boots, and hats. Levi Strauss hit the jackpot when Beyoncé referenced the denim brand in her song “Levii’s Jeans” earlier this year.
The resurgence of cowgirl and cowboy aesthetics has been further supported by new collections from luxury brand Louis Vuitton as well as Taylor Swift’s popular Eras Tour.
Upon assuming the role of Levi Strauss CEO earlier this year following her time at Kohl’s, Gass is celebrating denim’s current dominance and the broader acceptance of Western-style fashions.
According to the earnings meeting disclosures, Levi Strauss is capitalizing on the increased demand for denim, seeing a significant uptick in sales of denim skirts, jumpsuits, and dresses in the most recent quarter, as stated by Gass. She also highlighted a marked increase in Western blouse sales, particularly in women’s fashion.
Gass sees the strategic shift as a move to outfit customers in denim from head to toe, expanding beyond the traditional jeans approach. On CNBC’s “Mad Money,” she observed the growing popularity of denim skirts and dresses, which, despite not being Levi’s primary products previously, are now experiencing substantial growth.
Denim Style Trends Defy Wall Street Predictions
Despite the robust denim trend, Levi Strauss’s stock plunged over 15% following its recent financial report, marking one of its most significant declines since its 2019 IPO.
The company announced a revenue of $1.44 billion for the second fiscal quarter, slightly below the estimated $1.45 billion projected by LSEG analysts, despite the strong denim demand. The CFO informed CNBC that the shortfall was due to unfavorable currency exchange rates and weaker Dockers brand performance.
Conversely, Levi Strauss exceeded expectations with earnings of 16 cents per share, excluding certain expenses, surpassing the analysts’ forecast of 11 cents per share.
Despite the recent declines, Levi’s shares have still climbed over 18% in the past year, outperforming Kontoor Brands, the parent company of Wrangler and Lee, which grew by 5%.
Wells Fargo analyst Ike Boruchow commented that Levi’s second-quarter results were disappointing for ‘one of the most overbought names in the sector at present.’ Essentially, the company fell short of the high expectations set for it.
Citigroup analyst Paul Lejuez acknowledged the positives of the quarter but expressed concerns about wholesale operations and potentially weak European sales for the remainder of the year.
Lejuez pointed out various positive factors for the company’s future stock performance, including fresh designs and fits—common drivers of excitement in the fashion industry. He also highlighted Beyoncé’s influence as a unique element contributing to the mix.
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