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Levi’s Reaps Benefits of Post-Covid Shopping Habits

Levi’s recent earnings call for Q2 2022 sheds light on what business after a pandemic means to a heritage brand with global recognition for a single item: blue jeans.

Though more people are back to work in traditional settings, the denim category continues to reap the benefits of relaxed dress codes. Levi’s bottoms revenue was up double digits across both men’s and women’s versus last year and pre-pandemic Q2 2019 levels.

In general, Levi Strauss CEO Chip Bergh reported that sales for U.S. jeans were up 19 percent during the last 12 months ending in May—faster than total apparel sales—and new data shows that consumers are wearing jeans more often in professional settings. A global survey found that 50 percent of people said they can now wear jeans to work.

“It’s a huge change from pre-pandemic,” Bergh said, adding that CEOs are “probably just happy that people are coming into work.”

While loose, baggy and straight fits play strong rolls in the “new cycle” driving denim sales, Levi’s archive is proving to be a well of successful ideas. Sales for Levi’s iconic 501 rose 40 percent during the quarter for men’s and women’s. The jean was the focus of Levi’s spring campaign “Levi’s 501: The Number That Changed Everything,” featuring “Euphoria” actor Barbie Ferreira; A$AP Nast, a founding member of A$AP Mob; DJ, artist and producer Peggy Gou; soccer star, philanthropist and children’s activist Marcus Rashford; and model and YouTube host Hailey Bieber, who was named the face of the 501 in 2019.

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Levi’s Fresh collection of sustainably dyed garments inspired by a range from 1970s also received a positive reaction. Bergh said it was especially successful with women’s and tops, in addition to younger consumers with whom the brand is gaining share and seeing record engagement on TikTok.

The women’s categories continues to be a bright spot for the brand. Levi’s total women’s business grew 23 percent, the fifth consecutive quarter of double-digit growth since “exiting the most challenging parts with the pandemic,” Bergh said. Women’s saw broad-based growth across geographic segments, but growth was especially strong in the Americas. Levi’s women’s business was up 30 percent in Q2 and it in its top 10 wholesale accounts globally, women’s sales were up 50 percent.

One pre-pandemic normal that is rebounding is brick-and-mortar retail. During the quarter, Bergh said Levi’s benefited from a return of tourist traffic in many of its downtown locations, propelling growth in flagship stores in key cities like San Francisco, New York, Paris and London and the brand’s latest generation of new stores continued to perform against its expectations.

“We did see a moderation in online traffic as consumers return to shopping in our stores in large numbers,” Bergh commented.

The channel, however, still exceeds pre-pandemic levels. Global direct-to-consumer net revenues were up 16 percent versus a year earlier, reflecting a 23 percent increase in company-operated stores. Net revenues through all digital channels represented approximately 20 percent of total second-quarter net revenues, up 3 percent on top of 75 percent growth in the same quarter of the prior year.

“E-commerce remains an important driver of our growth algorithm, and we are committed to tripling its size over the next five years,” Bergh said. “To achieve this ambitious goal, we are building the capabilities and the organizational structure to both scale e-commerce and accelerate our broader digital transformation.”

Part of the strategy is to hire a chief digital officer role that will report directly to Bergh. He said the role will bring together Levi’s data, AI, engineering and digital product management efforts under one leader who will spearhead its digital efforts for both e-commerce and our digital go-to-market.

“We can’t control inflation. We can’t control what’s going to happen in interest rates or whatever the Fed is going to do or anything else, but we can focus on the things that are within our control,” Bergh said. “And we’re going to continue to do a great job executing against those things, connecting with consumers, and building the brand.”