(Levi) In its third trimester (Q3), an announcement that booming consumer demand for denim led to sales up by 41% over 2020 and by three percentage over 2019. Because many stores were shut because of the pandemic, and comparisons are made with 2019. Net profits increased by 56% over the same period in 2019. Digital channels contributed significantly to the rise in the Q3 period, with revenues up 76% compared to the year before and more than 10% over the previous year. Digital sales accounted for around 20% of third-quarter profits.
Bergh spoke about supply chain issues. However, he also explained that Levi’s diversity sourcing strategy has given them an advantage for the company: “Cross sourcing has been an effective strategy that lets us quickly change production when problems develop.” Levi was proactive by, for instance, shifting cargo toward the eastern coast when the ports on the west coast became overcrowded. With strong partnerships with vendors and flexibility in its distribution and production models, Levi has been able to limit the distribution chain’s impact on its inventory levels that were just down by 4% from last year.
Digital and direct-to-consumer growth have positively impacted gross margin, which stands at 57.6 percent, a significant improvement from 54.3 percent last year while 53% was recorded in 2019. Levi’s pricing strategy and ability to reduce out-of-stocks by utilizing its global diversification sourcing strategies and the focus on their Direct to Consumer business is expected to grow profits in the coming years.
Levi has agreed to buy Beyond Yoga. As per the statement, this purchase will help bring Beyond Yoga’s Beyond Yoga label to more customers via direct-to-consumer growth, which includes brick-and-mortar stores and gender and category expansion and further development of further development the wholesale footprint through high-end partners.
As Levi moves into the activewear segment, the partnership will benefit the women’s market, which is expected to comprise a 50percent of business. Bergh spoke about the ways Levi can bring into the alliance the capacity to expand and strengthen its brand: “Additionally, men’s yoga is an excellent chance to expand, and because of our experience in that segment, we’ll assist in growing businesses.” Bergh also discussed how the values of Beyond Yoga’s ethos Beyond Yoga brand is in line with Levi’s commitment to positive body image and inclusivity. The brand’s top-quality athleisure wear was launched in 2005 to promote the body’s positivity, honor everybody, and celebrate it starting at XXS-4X.
Although many companies face supply chain challenges, Levi has seemed to be ahead of issues that other retailers are facing by focusing on a multi-faceted source strategy. In addition, Bergh stated on the conference call that Levi has already reached agreements with prices for cotton through the spring of 2022. This means that Levi’s immediate negative business impact of the decade-long high in cotton prices is not a problem.
Levi also spoke about the report on sustainability that was released in September and focusing on consumption, climate, and the community “Levi Strauss and Co. has been operating over 168 years because we create robust products that are designed to last, and also because we follow a strict guiding principle of profit through the application of principles throughout the entirety of our operations,” said Bergh in the press release issued last month. Levi’s stakeholder-based approach lets the company help create a more sustainable environment and a sustainable future.