Not even digital dulls the store closure blow for Levi’s, says GlobalData

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Following the release of Levi’s figures for Q1 FY2020/21; Gemma Boothroyd, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Decent digital sales growth lent a helping hand to Levi’s during Q1 FY2020/21, as net revenue declined a moderate $200m to $1,306m, with COVID-19 store closures continuing to abate performance across the brand’s store fleet. European restrictions hit Levi’s particularly hard, with the region’s sales falling 16.4% due to one third of stores being shut, and weakened footfall in stores that were open, especially those based in tourist locations. But with vaccination ramping up in its home market of the US and the UK, Levi’s has raised its H1 FY2020/21 revenue growth guidance to 24-25%, from 18-20%, indicating light at the end of the tunnel.

“Levi’s DTC revenue fell 26% in Q1, which is surprising as the channel has been an outperformer for many other brands throughout the pandemic. To cope with the blow of its own temporary store closures, Levi’s stepped up its multichannel initiatives, enabling it to increase its online penetration by 7ppts to 26% for Q1, however this is relatively low when considering store closures. Levi’s has more work to do in advancing its digital proposition, with faster and more affordable delivery options a must, and stronger marketing of its 247 membership, which offers free shipping and exclusive promotions. The brand is however bolstering its investment in AI and machine learning to predict category trends and online purchasing behaviour, which will allow it to remain nimble as it pivots away from its traditional denim offering.

“Levi’s is paving the way for new products beyond its notoriously denim-centric offering. With the casualisation trend making waves throughout the pandemic, jeans have fallen in popularity, and Levi’s is wise to focus on alternative product categories such as casual shirts and homewares. Levi’s would also benefit from stepping into the sportswear arena, capitalizing on growing consumer demand for athleisure.”