Denim may have been the laughingstock of lockdown, but new research indicates jeans are poised to play a starring role in post-pandemic office wear.
With quarantine lifestyles on the cusp of reverting back to something akin to “business as usual,” UBS retail and softlines analyst Jay Sole sees three factors fueling a new cycle in denim, echoing similar sentiments from Levi’s CEO Chip Bergh.
“We think reopening will boost denim sales,” Sole said in a video this week. “We believe consumers’ attitude toward athleisure normalizes as stay-at-home becomes return-to-work, and return-to-group-events, yet we don’t expect a 180-degree shift into formal clothing.”
Denim, Sole added, allows consumers to step away from their lockdown loungewear and “into something that feels more put together, yet still comfortable.”
Sole is already starting to see signs of the fashion shift as consumers embrace new denim styles. Though skinny jeans have virtually dominated denim’s past decade, a new UBS study based on Google Search analysis indicates a “significant increase” in global queries for fashion-forward silhouettes. “We think this is going to drive incremental denim category purchases,” he said.
While searches for skinny jeans are still going strong, looser fits and straight-leg jeans are starting to gain traction, Sole said. “We think this data is evidence of the silhouette shift, as well as the enduring interest in skinny jeans,” he added.
The analyst believes denim giants from American Eagle and Levi’s to Wrangler parent Kontoor and Abercrombie & Fitch stand to benefit from consumers’ renewed interest in fresh fits. “The other reason we think these companies are well positioned,” Sole said, “is they have great innovation and have been savvy around introducing new styles to their consumers in ways that encourage adoption.”
According to Sole, Kontoor Brands derives 87 percent of its sales from denim, which drives 60 percent of Levi’s business. The UBS team estimates that “American Eagle and Abercrombie & Fitch also have strong leverage, given 15 to 25 percent of their sales are likely in the denim category.”
Denim sales are picking up in other corners of the retail sector as well. In a fireside chat at a conference earlier this week, Macy’s Inc. CEO Jeff Gennette mentioned a “meaningful” uptick in denim sales at the department store compared with business in 2019.
