Levi Strauss & Co., known for its denim brand Levi’s, continued its ecommerce sales growth momentum in its fiscal Q1, which ended March 2.
Levi Strauss reported $1.49 billion in Q1 total net revenue, with Levi’s accounting for the vast majority, at $1.43 billion in the quarter. Remaining revenue came from its Levi Strauss Signature ($56.5 million) and Denizen brands ($2.3 million). The retailer said its financial results were “better than expected.”
Levi Strauss direct-to-consumer sales, which include ecommerce, accounted for 52% of total global net revenue. President and CEO Michelle Gass called that “a milestone as we transform into a DTC-first company” in the retailer’s April 7 earnings call with investors. Meanwhile, Levi Strauss’ wholesale channel grew 5%, which she attributed to strong growth in the U.S. (up 9%).
The retailer’s portfolio “beyond denim bottoms” now comprises 35% of total sales, Gass added. Still, sales of the retailer’s bottoms grew 9% year over year in Q1.
Levi Strauss is also exploring the sale of its Dockers brand, which it has classified under “discontinued operations.” Chief financial and growth officer Harmit Singh said that although Dockers positively contributed to sales, the retailer’s gross and operating margin structure is higher excluding the Dockers brand. A sale of the Dockers brand would improve “the structural economics and profitability” of Levi Strauss business, Singh said.
Benefit of Levi Strauss international sales amid tariffs
Gass also mentioned that Levi Strauss international sales represent “close to 60%” of the retailer’s total business. That’s up 9% year over year in its fiscal Q1. She attributed the growth to sales in Mexico (up 6% as a result of increased store traffic and ecommerce), France, Germany and the U.K.
Since the announcement of a new tariff structure on what President Donald Trump referred to as “Liberation Day,” the U.S. administration has again made changes to its tariff structure.
“Given that the situation is fluid and unprecedented, the impacts are uncertain,” Singh said. “We are in the process of scenario planning and determining different mitigation strategies. We recognize this is a quickly evolving macro situation and we have to see where the dust settles to give you the guidance that is going to be as helpful to you as possible. For now, our full year outlook remains unchanged and includes no impact from the proposed tariffs.”
He said although the tariffs announced on “Liberation Day” pose “a significant challenge for us and the industry,” Levi Strauss has shown its resilience as a 170-year-old company. As far as inventory planning goes, Singh said the retailer’s is healthy. He cited “Red Sea disruption” as a result of Yemeni Houthi attacks on cargo ships as affecting year-over-year inventory changes.
“Given last week’s tariff announcement, we’re dealing with a dynamic macro environment,” Gass said. “However, I’m confident in our ability to navigate these rapidly evolving times.”
In the U.S., Levi Strauss net revenue grew 8% in Q1.
She added that Levi Strauss has “scale with an agile global supply chain, deep vendor relationships, and a strong balance sheet, all of which position us well to navigate this time of uncertainty.”
Levi’s ecommerce sales
In Q1, Levi’s grew ecommerce sales 16% year over year. That follows 13% ecommerce sales growth in the prior Q1.
Ecommerce sales comprise 12% of total Levi Strauss net revenue. Gass told investors that the channel represents a “significant engine for growth.”
Levi Strauss is No. 156 in the Top 2000 Database. The Top 2000 ranks North America’s online retailers by their annual ecommerce sales.
“Over the last couple of years, the team has been focused on three core areas to fuel momentum in our e-comm channel, including fixing the fundamentals, evolving the assortment and elevating the consumer experience, creating a much more premium and engaging destination for the full Levi’s experience,” Gass said.
Among its changes, Gass said, Levi’s has upgraded the content on its site with higher-quality imagery. It has also featured more videos on its product detail pages.
Singh said Levi Strauss consistently executes on what he calls a trifecta:
- Positive comparable sales
- Opening high-performing stores
- Growing ecommerce profitably
That came from increased traffic, conversion, and average unit retail (AUR), Gass said.
“The growth is healthy and it’s sustainable,” Gass said. “We’re seeing both it coming through volume and units, which accounted for about two-thirds of the business and we’re also seeing AURs up, which is about up a third.”
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