No shrinkage... In its first earnings report since its March IPO, Levi's sales and profits rose 11% and 81%. That's 11x81 in jean-speak. The stock's now up 25% since its first day of trading. Even better, the CEO doesn't think you should wash your jeans. Maybe ever.
Ripped. Not intentionally... Because of two market trends, denim sales globally have only risen 3.5% per year over the past decade — Not very fast, considering the rest of the economy's grown faster.
- Athleisure's surged 7% per year as consumers rethink boot-cut skinny-crops for jog-worthy yoga pants — In 2017, US imports of stretchy knit options beat denim for the 1st time ever.
- Online shopping now makes up over a quarter of all apparel sales. But unlike jeggings, jeans need to fit just right, best tried-on pre-purchase. That's a challenge online.
Stretch jeans to everywhere... That's Levi's strategy. It's leaning into its 166-year-old brand's global recognition to win jean sales away from other denim denizens. The real growth story is international, and it IPO'd to focus on that. So far, it's working — Here's where that happened last quarter (adjusted for foreign currencies):
- Americas: Sales up 10% to $717M
- Europe: Up 10% to $465M
- Asia: Up 14% to $253M — China + India is where Levi thinks there's huge potential for growth