A few days ago, global denim giant Levi Strauss & Co. (Levi's, Levi's) announced its performance data for the first quarter of fiscal year 2024 (as of February 25, 2024). Levi's revenue in this quarter decreased by 7.77% year-on-year to US$1.558 billion. If excluding the impact of closing its subsidiary brand den-izen business and Russian business, revenue was consistent with the same period last year, and gross profit was US$907 million, slightly lower than the same period in fiscal year 2023. of US$942 million, with a net loss of US$10.6 million, compared with a profit of approximately US$115 million in the same period in fiscal 2023. Although higher than analysts' expectations, it is not difficult to see that Levi's has actually fallen into profitability troubles.
However, at this time, Beyoncé, who has nearly 320 million social media fans, stepped in to give Levi's a hand. She released her latest album "Cowboy Carter" at the end of last month, and it topped multiple music charts on the first day of release. The western cowboy image she created to echo the style of the new album even boosted the sales of jeans. According to CBS, one week after the release of the single "Levi's Jeans" from the new album, Levi's stock price once recorded a rise of more than 16% on April 4. According to pass_by's data, compared with Easter weeks in the past three years, Levi's has recently seen a nearly 20% surge in customer traffic at stores across the United States.
Beyoncé’s new album “cowboy carter”.
About 100 new stores will be opened this year
Michelle Gass, the new CEO of Levi's brand, said when releasing the first quarter financial report that the brand's retail business performed well, "Our performance this quarter proves that promoting our brand and direct-to-consumer business And the strategy to diversify the product portfolio is bearing fruit." She highlighted Levi's direct-to-consumer (DTC) revenue growth of 8% compared with the first quarter of 2023, online sales increased by 12%, and overall direct retail sales. Online sales of women's clothing products increased by 14%. At the same time, the brand plans to open about 100 new stores this year, most of which will be opened in the Asian market.
In the 2023 fiscal year ending on November 26, 2023, the brand's net sales were US$6.179 billion, which was basically the same as US$6.169 billion in fiscal year 2022. Net profit fell 56% year-on-year to US$250 million, excluding those that did not have Due to persistent and general factors, adjusted net profit still fell 27% to US$441 million. Since Levi Strauss & Co. returned to the New York Stock Exchange in 2019, the sales growth in fiscal year 2023 is the lowest level except for fiscal year 2020. However, now with the popularity of Beyoncé, Levi's may usher in a turning point in performance. Michelle Gass revealed that the brand will simultaneously increase its full-year profit indicators for 2024. It is expected that the full-year revenue growth will still be 1%-3%, but the earnings per share range will be increased to 1.17-1.27 US dollars. Levi's stock price has risen by 13% since the beginning of this year, with a market value of approximately US$8.18 billion.
closed the footwear business production line
Michelle Gass officially took office in January this year and launched a two-year plan called "project fuel" (fuel plan), aiming to reduce costs and streamline processes by optimizing the operating model and structure. It is expected to generate net cost savings of $100 million for the company in fiscal 2024. Levi's initially said it would cut 15% of its workforce, primarily by cutting middle management positions. Harmit Singh, the group's chief financial officer, said in an interview with financial analysts that measures have been taken in this direction to reduce the number of Levi Strauss employees worldwide by 12%, mainly focusing on middle management positions.
In fact, Levi's has announced that it will terminate the denizen brand, especially in Asia and other international markets, and announced two other high-impact policies. First, Levi's discontinued its footwear business, deeming it too small and irrelevant to its core business. Secondly, the group announced that it would close its factory in Płock, Poland, in order to "optimize the supply chain and make it more flexible while reducing costs."
Levi's discontinues footwear business.
The Plock factory has a long history of association with Levi's. Opened in 1991, the factory has up to 1,000 employees and an annual output of approximately 300,000 pieces. According to Polish media reports, the factory, which currently employs 650 people, will stop accepting orders in June and close in November. Levi's said the changes are expected to "help unlock the true potential of the brand on a global scale.These policies will allow us to expect to achieve cost savings of approximately $100 million in 2024 and additional savings in 2025.
The group also said its gross margins were improving, as it began to benefit from work on retail distribution and supply chain, in addition to taking advantage of the restructuring.
Expanding non-denim products
Levi Strauss & Co. was founded in 1853 The company has grown into one of the world's largest designer apparel companies. Its brands include Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen, and the company designs and sells products, including jeans, casual wear, directly or through third parties and licensees. and dress pants, tops, shorts, skirts, jackets, footwear and related accessories.
Levi's is keen to grow its retail business, primarily because it allows the brand to sell other categories besides pants, thereby generating additional revenue. These categories account for more than 40% of the brand's sales. "We are the authority in jeans and we are expanding our expertise to become the authority in denim. Categories such as skirts and dresses are growing at triple-digit rates. We are launching new denim shirts, tops, vests, etc." The CEO revealed, "We are fully restarting our tops business because the growth of the tops category is higher than the rest of the brand's business, and DTC revenue has increased by about 10%," it is reported. Levi's also hired a vice president responsible for top design. The group recently announced the appointment of Gianluca Flore as commercial director and joined the executive leadership team, responsible for overseeing the brand's commercial operations in all global channels. It is reported that the appointment will take effect on July 29. Gianluca Flore joined Burberry in 2017 and previously held a series of leadership roles at luxury goods giant Kering Group. She worked at Bottega Veneta for six years and was promoted to CEO of Brioni, with a leading position in luxury apparel and lifestyle. More than 20 years of international business experience.
Many fashion commentators recently pointed out that with the re-launch of skinny jeans by miu miu, versace and British designer brand Aaron Esh on the 2024 autumn and winter shows, skinny jeans may follow the trend of denim shirts and denim. Jackets usher in a wave of retro trends.
Written by: Nandu reporter Wang Xin
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