Levi's performed better than expected in the previous quarter. This encourages the jeans brand to focus more on its own shops and e-commerce: plans to open new stores are in the making.
Missed by a hair
In the last quarter, Levi Strauss' good results came as a surprise to both the company and analysts. The jeans brand missed slipping into a loss by a hair and made a net profit of 27 million dollar (23 million euro), compared to 124 million dollar (105,4 million euro) last year. Although sales fell by 27% to 1.06 billion dollar (0,9 billion euro), turnover was still better than the 822.3 million dollar (699 million euro) expected by analysts. In Europe, net sales declined by 16%.
“We exceeded our expectations for the third quarter”, management said, relieved. “Adjusted EBIT was positive and adjusted free cash flow was even higher than in the third quarter of last year, reflecting the company’s successful efforts to mitigate the impact of the COVID-19 pandemic.”
Expanding the store network
Online sales are particularly encouraging: the company's own e-commerce activity increased by 52%, while total online sales turnover (including wholesale customers' platforms and online shops) increased by 50%. Online sales thus accounted for around 24% of total revenue in the third quarter, twice as much as last year. In addition to jeans, online sales of women's clothing were particularly successful.
This encourages Levi's to accelerate its direct-to-consumer strategy: the jeans brand wants to expand its own retail network, both online and offline. CEO Chip Bergh believes that the growth of DTC will outpace the wholesale channel and notes that e-commerce also drives margins, according to Reuters. The company is already considering opening new shops, although Bergh promises to continue the expansion of wholesale distribution as well.