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Levi ‘s online sales hit ‘profitability a year ahead of schedule’, says CEO

Levi Strauss & Co, the US clothing company is known worldwide for its Levi’s brand of denim jeans has reported profitability on its e-commerce business. Although the COVID 19 pandemic has pulled down the company’s revenue, the online model has shown a lot of promise.

CEO Chip Bergh told CNBC’s Jim Cramer Wednesday that despite a double-digit drop in revenue in the third quarter, Levi’s managed to not only turn a profit but also make its e-commerce business profitable.

“We’re going to see e-commerce continue to grow,” he said in a ” Mad Money ” interview. “We’re profitable a year ahead of schedule, despite all of the accelerated investments that we’ve made.”

Although Levi’s total revenue plunged almost 27% during the three-month period ended Aug. 23, yet some of the lost business was offset by 52% growth in the company’s e-commerce sales. E-commerce made up 8% of the apparel company’s $1.06 billion in revenues, double its rate from a year ago, Bergh said.

Seven out of ten of the shoppers on its website were first-time shoppers, he added.

The $1.06 billion that Levi brought in smashed the $822.2 million that Wall Street analysts expected. The company was also expected to turn in losses of 22 cents per share, but the company showed earnings of 8 cents per share. The profit was a reversal from when Levi recorded a loss during the early months of coronavirus.

Levi’s has invested heavily in both online and brick-and-mortar operations as the retailer looks to build up its direct-to-consumer services. The company also built out its omnichannel capabilities, which Bergh said has benefitted greatly from the pandemic environment. “The pandemic has compressed what might have taken 5 or 10 years and it’s compressed it into a very, very short window, and I have to say the acceleration of our e-commerce business has been one of the beneficiaries of that,” he said.

Outside of the impact of coronavirus on sales, fashion trends further influenced by the new normal have also been a positive for Levi. As companies fast adjusting to working from the home model, the official dress code has become more casual.

The last ten years witnessed casual workplaces in the tech industry, the work-from-home reality has had a particular impact on the fashion industry. Business and professional attire is less needed when working remotely over Zoom, which has led to depressed sales in the formal suit and necktie category.

This summer the impact was very much evident with bankruptcies in holding companies of suit retailers like Men’s Warehouse and Jos. A Bank.  Although clothing sales have been down overall, yet consumers are spending money on athleisure and loungewear. Denim has also benefited from trends toward casualization, Bergh said.

One area of growth was in women’s shorts, he added.“The women’s shorts business was up double digits,” he said. “Our total U.S. women’s wholesale business grew double digits this past quarter and our women’s bottoms business on a global basis drove 50% of the total online growth that we saw this past quarter and our online business was up more than 50% as a percentage of our business so really strong results.”

Alf Alferez
Alf Alferez
Dedicated writer with a strong track record of developing customer loyalty and managing general office operations. Enjoy being a part of a company where my skills and creative ideas will benefit the overall productivity of the organization. I have a strong desire to work in helping make the world a better place. Please reach out to me on alf@ecommercenext.org

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