Levi Strauss & Co. maintained its outlook for the full year. It even boosted its financial targets over the next five years. Hence, the denim retailer grew its eCommerce business.
The company views itself as much stronger than before. Financial Officer Harmit Singh said, “We are reaffirming full-year guidance, despite all the headwinds. The trends we see in the eCommerce business give us confidence. We are looking at the short term while also not losing sight of the long term.”
Retailers from Walmart to Abercrombie & Fitch called attention to the challenges that they were facing. Problems include ongoing supply chain problems and mismatched inventories. Reasons like red-hot inflation and a potential pullback in consumer spending are also setting them back. Retail executives stated that lower-income shoppers are already feeling the pinch of higher prices on goods.
Whereas wealthier households are splurging on new outfits, makeup, and luggage for summer travel. The split in behavior resulted in a similar divide in the retail industry. Luxury and high-end brands largely outperformed businesses. These eCommerce businesses cater to price-conscious consumers. Brands like Canada Goose to Michael Kors parent Capri Holdings got included in this. Levi’s doesn’t expect the volatile economic backdrop will dent demand for its jeans.
Levi sees annual revenue growth in the range of 6% to 8%. Levi’s revenue will get close to $10 billion five years from now. It still projects sales to increase between 11% and 13% from 2021 levels.
According to Refinitiv data, analysts were looking for revenue to rise by 11.8%. By 2027, Levi said it aims to expand its direct-to-consumer business to 55% of total sales. It also aims to achieve triple e-commerce revenue.
Levi’s direct business accounted for about 36% of total sales in the retailer’s latest fiscal year. Digital revenue made up 22% of the total revenue of $5.8 billion.
Levi is also pushing shoppers to buy more than just the company’s iconic denim bottoms. It’s aiming to nearly double revenue from the top by 2027. Shares of Levi are down about 28% this year.