Levi Strauss reports 19% ecommerce growth in Q2 earnings amid disappointing overall sales
The denim brand recorded $1.4 billion in net revenue for Q2, with earnings facing challenges from consumer denim interest.
Challenges persist in the denim industry in 2024, and those struggles were evident in Levi Strauss & Co.’s Q2 earnings. Nevertheless, the brand is optimistic that its transformation into a digital and direct-to-consumer retailer will bear fruit.
Levi‘s net revenue for the second quarter was $1.44 billion, below analysts‘ expectations of $1.45 billion. Still, that marked an increase of 8% over the same period last year. The company noted that, taking into account wholesale deliveries related to the implementation of the enterprise resource planning (ERP) system in the United States, net revenue increased by 1% year-on-year and by 2% in constant currency terms.
Levi’s reported net revenues in 2024 are expected to be up 1% to 3% year over year, and probably toward the upper end of that range.
Cash and cash equivalents were $641 million, while total liquidity was approximately $1.4 billion.
Total inventories decreased 7% on a dollar basis and 19% excluding the impact of modified terms with the majority of suppliers, which now results in the company taking ownership of inventory for goods brought into the Americas closer to the point of shipment rather than destination.
According to Levi’s CEO Michelle Gass, the core of the business remains very healthy. She specifically pointed to the strength of some of their legacy products like the 501 brand.
Levi’s has been undergoing a strategy that emphasizes more direct-to-consumer sales as opposed to its long-time strategy of its jeans being sold in retailers like Macy’s and T.J. Maxx. The direct-to-consumer (DTC) strategy was a bright spot, seeing revenues increasing 11%. Its women’s DTC channels saw a 22% increase.
Revenues from ecommerce grew 19% on a reported and constant-currency basis, reflecting double-digit growth across the Levi’s and Beyond Yoga brands. DTC comprised 47% of total net revenues in the second quarter, down 1% from Q1.
Harmit Singh, Director of Finance and Development at Levi & Strauss, was particularly optimistic speaking about the company‘s e–commerce and digital channels development during the conference
The company’s Beyond Yoga brand has seen one of the biggest increases in digital sales.
Singh said that the DTC of the company’s business is growing in profitability.
While Levi & Strauss leaders voiced general confidence in continued growth, inflation continues to be a drag on consumers.
Singh warned that consumers are “generally cautious” and aren’t spending a lot on discretionary items.