Levi Strauss (LEVI) says it’s seeing a new type of U.S. consumer coming out of the other side of the pandemic — one with a much different waistline than when the pandemic began more than a year ago.
And that is helping to spur strong sales of looser fitting Levi’s jeans (which are higher priced) among other key styles, explained Levi’s CFO Harmit Singh on Yahoo Finance Live.
In reality, the lack of mobility caused by the pandemic has caused most consumers to gain a lot of weight — making the pants in their closet unusable for their return to post-COVID life. About 42% of people polled in a recent survey from the American Psychological Association said they gained more weight than they intended during the pandemic. Of those surveyed, the average weight gain has tallied 29 pounds. Roughly 10% of those surveyed said they gained more than 50 pounds.
Levi’s has seen a swift lift in business as a result of the need to rebuild closets.
The retailer said Thursday evening that second quarter sales surged 148% from a year ago, benefiting from strong demand and easy comparisons to store closures last year. Sales rose by triple-digit percentages in Levi’s three regions of business: Americas, Europe, and Asia. Docker’s sales gained an impressive 100% from last year.
Strength was seen in both men’s and female bottoms.
Here is how Levi’s performed compared with Wall Street estimates on its earnings day Thursday evening:
Net Sales: $1.28 billion vs. $1.21 billion
Diluted EPS: 23 cents vs. 9 cents a share
Second Half 2021 Outlook: Sales up 28% to 29% and adjusted earnings of 72 cents to 76 cents.
Levi’s shares rose 3% to $27.80 on Friday amid the quarterly strength and upbeat outlook.
The Street widely expects Levi’s to have big back-to-school and holiday shopping seasons amid the closet rebuilding and kids returning to school.
“We believe the organic health of Levi’s business is getting better overall as we emerge from the COVID-19 pandemic, with the company seeing improving wholesale trends as well as increased denim demand as the world re-opens. We are encouraged by the company’s offensive strategy, strong brand, experienced management team, and healthy financial position,” Guggenheim retail analyst Robert Drbul said in a research note to clients.
Drbul maintained his Buy rating on Levi’s with a $33 price target.
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