Levi & Strauss reports e-commerce growth in Q2 results

The denim industry continues to face challenges in 2024, and those struggles were evident in Levi & Strauss Co.’s second-quarter results. Nevertheless, the brand is optimistic that its transformation into a digital, direct-to-consumer retailer will bear fruit.

Levi’s second-quarter net revenue of $1.44 billion was below analyst expectations of $1.45 billion. Nevertheless, this represented an increase of 8% compared to the same period last year. The company noted that after accounting for wholesale shipments related to its enterprise resource planning (ERP) implementation in the US, net revenues increased by 1% year-over-year – and by 2% on a constant currency basis.

Other highlights from Levi’s earnings report included:

Levi’s net revenue in 2024 is expected to grow 1% to 3% year-over-year and is likely to be at the high end of that range.
Cash and cash equivalents amounted to $641 million, while total liquidity was approximately $1.4 billion.
Total inventories decreased 7% on a dollar basis and 19% net of the impact of changed conditions at most suppliers, which now means the company is taking ownership of inventory of goods brought into America closer to the point of shipment rather than the destination.

“The fundamentals of our business remain very healthy,” said Michelle Gass, CEO of Levi’s, during an earnings call with shareholders. In particular, she pointed to the strength of some of their older products, such as the 501 brand.

“Our original icon, 501, continues to deliver impressive growth, up 16% in DTC in the second quarter,” Gass said.

Levi & Strauss e-commerce sales by year

Levi’s Online Sales in Q2

Levi’s is pursuing a strategy that places greater emphasis on direct-to-consumer sales, as opposed to its long-term strategy of selling jeans in stores like Macy’s and TJ Maxx. The direct-to-consumer (DTC) strategy has proven to be a good one, with revenue up 11%. Women’s DTC channels grew 22%.

E-commerce revenue increased 19% on a reported and constant currency basis, reflecting double-digit growth in the Levi’s and Beyond Yoga brands. DTC accounted for 47% of total net revenue in the second quarter, down 1% from the first quarter.

Harmit Singh, chief financial and business development officer at Levi & Strauss, presented a particularly optimistic picture for the company’s e-commerce and digital channels during a conference call.

“Our e-commerce business is on fire,” Singh said, giving credit to the company’s internal teams for driving loyalty, increasing conversions and fixing the fundamentals. The company’s Beyond Yoga brand saw some of the highest growth in digital sales.

Singh said the profitability of the company’s DTC business is growing.

“DTC continues to be not only our fastest-growing business, but it is also seeing real improvement in profitability, with operating margins up more than 300 basis points during the quarter,” Singh said. “This includes significant improvement in e-commerce profitability.”

Potential signs of consumer caution

Although Levi & Strauss leaders expressed broad confidence in continued growth, inflation remains a drag on consumers.

Singh cautioned that consumers are “generally cautious” and not spending much on discretionary items.

Levi’s is ranked 162nd in Digital Commerce 360’s Top 1,000 Retailers in North America, where we rank it in the Apparel & Accessories category. Digital Commerce 360 forecasts Levi & Strauss’ total e-commerce sales in 2024 to be $576.75 million.

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