While other brands are seeing the benefits of retailer partnerships, Levi’s has entirely different POV. In fact, it’s leading Levi’s to place major bets on its direct-to-consumer (D2C) strategy.
“Over the last decade, the company has made phenomenal progress, more than doubling our D2C revenue while engaging consumers … in our stores, and we see a clear line of sight the mid-teens D2C growth rate target of our long-term financial algorithm,” said Michelle Gass, president of Levi Strauss & Co., during the company’s third quarter earnings call on Thursday (Oct 5).
“With the strong momentum and consumer permission, now is the time to accelerate our transition to D2C, where we will evolve our culture and operating model, and our consumer centricity will drive every aspect of how we operate.”
One of the highlights of Levi’s D2C strategy is the expansion and evolution of its loyalty program. In the third quarter alone, the program added nearly 2 million members, bringing the total number of members to 28 million worldwide.
With that, Levi’s loyalty program has proven to be a crucial component of its D2C strategy, and for good reason. By nurturing a community of 28 million members, the brand has also gained access to a wealth of data and insights into customer preferences and behaviors, enhancing the overall shopping experience for members and encouraging repeat purchases.
On the other hand, Levi’s wholesale experienced “softness” as consumers remained cautious of their purchases. But that isn’t surprising, as even before student loan payments, Americans have been struggling.
On Saturday (Sept. 30), Bloomberg News published a report that detailed a range of concerning issues. These include the impact of elevated gas prices, an increase in delinquent credit card accounts, and consumer confidence taking a hit, largely attributed to concerns about inflation and a pessimistic economic outlook.
Read more: Consumer Strength Challenged as Spending Drops
With that, Levi’s noted: “While we’re continuing to focus on accelerating our D2C business, we’re also working closely with our wholesale partners to ensure they have the right assortment and deliver newness, including lighter-weight denim, more dresses and tops.”
In the third quarter, Levi’s reported $1.5 billion in net revenues, holding steady compared to the previous year on a reported basis but showing a 2% decline in constant-currency terms from Q3 2022.
Their D2C net revenues surged by 14% on a reported basis and 13% on a constant-currency basis, driven by company-operated stores and eCommerce. Meanwhile, wholesale net revenues declined by 8% on a reported basis and 10% on a constant-currency basis.
Levi’s experienced regional variations, with growth in the Americas’ D2C net revenues but a decline in wholesale, Europe reporting modest declines, and robust growth in Asia, particularly China. Levi’s other brands, including Dockers and Beyond Yoga, also saw positive revenue trends.
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