Levi Strauss CEO Chip Bergh explained that the historically hot summer in 2023 impacted the company’s denim wholesale figures. The record-breaking heat led to a decline in wholesale revenues as Levi’s wholesale customers, who have a limited assortment of the brand’s products, struggled to adapt to the weather changes. Bergh mentioned that the wholesale partners primarily sell blue jean bottoms, making it challenging to sell such products during extremely hot weather conditions. However, Levi’s direct-to-consumer business performed better during the quarter, with the company’s own stores offering weather-appropriate products like shorts and dresses.
Despite the drop in wholesale revenues leading to a cut in profit outlook for the year, Levi’s found a bright spot in direct-to-consumer sales. Bergh expressed cautious optimism heading into the holiday season but acknowledged the impact of a challenging economic macro environment on the business. Levi’s value businesses, mainly sold in stores like Walmart and Target, experienced a decline in this quarter. Bergh highlighted that middle-income and moderate-income consumers are making tough budget choices, negatively affecting the apparel and denim market. Despite the economic challenges, Bergh emphasized Levi’s strengths and expressed the need to navigate through the current economic period, working with wholesale partners to stimulate growth in that segment.
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