Despite operating in a supremely uncertain environment, Levi Strauss & Co. anticipates the strength of its brand coupled with its digital investments will carry it through the coronavirus health crisis.
It also sees future opportunities within the challenged retail landscape as vacancies are expected to open up.
The apparel brand and retailer reported net revenue up 5%, to $1.5 billion for its fiscal first quarter. Direct-to-consumer sales grew 13%, while brick-and-mortar revenue grew 14%. Global e-commerce revenue was up 12%, and the company’s total digital ecosystem now comprises over 15% of total company revenue.
The company is seeing early success with its recently launched Levi's brand mobile app, Chip Bergh, Levi’s president and CEO, said during an earnings call, with strong consumer acquisition and enrollment rates. The company will continue to scale and ramp up its loyalty program and app throughout this year.
To navigate the difficult economic environment, Levi’s has also accelerated the rollout of new 3D technology used for sampling and design, enabling it sell to merchants without physical samples.
Bergh noted that the technology proved to be so successful during a recent virtual assortment meeting that the company “may never go back to live meetings.”
“This technology and others like it will drive efficiency, speed the market and reduce waste, while improving our operations through and beyond the crisis,” he said.
As with most retailers, Levi’s has temporarily shuttered its U.S. stores. Effective April 13, all U.S. hourly retail employees and its wholesale merchandise coordinators will be furloughed. To further manage costs, board members are forgoing cash compensation and executives are taking 30% salary cuts.
The company is also reducing capital spend on discretionary projects while re-evaluating its store rollout plan. It is, however, still on track to open its new smaller store format this summer, and it remains optimistic about the model.
“I do believe crisis creates opportunities,” said Bergh. “There are going to be some players in this industry that don't make it, and that's going to open up real estate opportunities for us potentially. …We could wind up being the shared beneficiary of others not making it.”
Consumer engagement remains a priority for Levi’s as it seeks to remain top of mind during a period in which apparel purchasing is expected to take a backseat. It’s replicating digital strategies that proved to be successful in China during and after the area’s lockdown, such as “do-it-yourself content” on its website for consumers to customize their Levi's products at home.
The company also launched a month-long virtual music festival on Instagram Live featuring such artists as Snoop Dogg and Brett Young — performing, of course, in their Levi's.
Bergh noted that social media is helping propel brand awareness, giving the company something to build on post-crisis.
“I'm very, very confident that whatever the shock is to the consumer and the economy, when the consumer does emerge from hibernation, they're going want to go back to the brands that they love and to the brands that they're comfortable with. … And that's why I believe we're poised to win in this environment,” said Bergh.