Levi's posts record DTC revenue, sees consumer 'bifurcation'
Loyalty membership grew 40% in the company's first quarter.
Photo by Austin Burke on Unsplash
Loyalty membership grew 40% in the company's first quarter.
DTC continued to be a driver of growth for Levi Strauss through the holidays and start of 2023, as the apparel company posted another record in the segment that includes owned stores and ecommerce channels.
DTC now accounts for 42% of global revenues for the maker of Levi’s and Dockers, which is up three points from last year. Here are a few highlights for the results for the quarter ended Feb. 26
Globally, DTC revenue was up 16% year-over-year on a constant currency basis, posting a record. This outpaced overall revenue growth of 9%.
In the U.S., DTC posted a record, with 15% revenue growth in the Americas as a whole.
Ecommerce grew 14% on a constant currency basis.
Loyalty membership grew 40% to nearly 25 million members, who are spending more than other consumers.
“The investments we're making to elevate our consumers' digital experience and strengthen their digital connection to our brands are paying off,” CEO Chip Bergh told analysts on the company’s earnings call. “...We continue to expand the breadth of our offering online while improving the user experience..”
Levi’s shift to emphasize DTC puts the company in a position where “where we are in control of the brand and how we engage with the consumer and how we show up. It shows up in the business results.”
The growth comes as Levi’s is continuing to expand owned brick-and-mortar stores, opening five in the quarter in the U.S., and 25 globally.
At the same time, it is implementing the infrastructure to facilitate omnichannel commerce, with a new enterprise resource planning (ERP) system currently being deployed in the U.S. following activation in Mexico and Canada. The ERP’s benefits include increased data insights and simplification for operators, said CFO Harmit Singh.
“Especially as we grow ecommerce and we grow our direct-to-consumer business, this gives us the foundational base to actually accelerate automation and connect with the consumer a lot better,” Singh said.
The growth in direct sales comes as the company is facing the same headwinds from inflation and interest rates as the rest of retail. Yet owned channels and a strong loyalty program that keeps repeat customers spending are providing a lift, especially as wholesale is softening in the U.S. Brand equity is also strong, as Bergh said people are still seeking out Levi’s.
"We are now the outright leader in the men's and women's 18- to 30-year old jeans market after gaining one point of value share in the past 12 months and past three months and we continue to grow share in women's denim bottoms, closing the gap," Bergh said. "We are now knocking on the door being the number one brand in the U.S. That has not happened in my entire 11-and-a-half years at this company."
Yet Levi Strauss is also observing consumers beginning to move into two camps amid continued inflation: Bergh said there is softness in Levi’s value categories, but growth in brackets above that, which includes consumers that tend to be favorable for the owned channels, including ecommerce.
“There's definitely a bifurcation happening, where the lower end consumer is making hard choices and either trading down or just not buying denim,” Bergh said. “But that middle-income consumer, which is kind of the sweet spot for the Levi's brand, is doing well and is still buying denim, and that is driving the growth of the Levi's business, the growth of our DTC business and the strength that we are seeing in our direct-to-consumer business.”
Dealboard has funding and M&A updates from ecommerce aggregators and forecasting software.
This week, the aggregator space is active with M&A, IKEA is ready to roll out newly-purchased warehouse management software and Authentic Brands Group acquired a boot icon. Plus, there’s new investment to report for YouTube influencer Emma Chamberlain’s coffee brand and retail forecasting.
Here’s a look at the latest deals:
Chamberlain Coffee, the consumer brand founded by YouTube influencer Emma Chamberlain, raised $7 million in new funding.
The financing included backing from existing investors including Blazar Capital, Chamberlain and United Talent Agency. New investors include Volition Capital, Electric Feel Ventures, L.A. Libations and Noah Bremen, founder of PLTFRM.
The new funding follows the launch of a Ready-to-Drink (RTD) product and coffee pods. Previously, the brand raised a Series A in August 2022.
"Creating a uniquely inviting coffee brand has been my dream for so long now, and having key investors back us allows us to build Chamberlain Coffee in ways that feel fresh and exciting,” said Chamberlain, in a statement. “There are so many products I am eager to develop and projects I'm excited to get working on. With such an incredible team and group of investors I am more excited than ever to see what the future holds for Chamberlain Coffee."
Impact Analytics, a software company for retail supply chain and merchandise planning, raised new funding from Vistara Growth.
The new investment, the amount of which was not disclosed, comes after Impact raised funding in February 2021 and October 2022 from Argentum.
The funding will help Impact Analytics further develop its Impact Analytics SmartSuite product portfolio, which is designed to help optimize forecasting, merchandising and end-to-end lifecycle pricing. Rather than the traditional forecasting approach of basing decisions on the preceding year, Impact Analytics applies a model that includes 150 variables from internal and external sources, while combining recency and history. Clients include BJ's Wholesale Club, Dick's Sporting Goods, Puma and Tapestry.
Selva Ventures, a venture capital firm focused on consumer brands that promote healthier living, closed its second fund at $34 million, TechCrunch reported.
With the new funding, Selva will invest in brands across categories including health, wellness, beauty and personal care. The fund expects to write checks of $1-2 million in seed and Series A startups, while assisting in areas like finance, operations and retail partnerships.
Backers of the second fund include Unilever Ventures, PagsGroup and Obelysk.
Nautica and Forever 21 owner Authentic Brands Group acquired the intellectual property of Hunter, a 160-year-old British outdoor lifestyle brand known for its Wellington boots.
With the deal, ABG appointed longtime partners Batra Group and Marc Fisher to execute retail and ecommerce operations, as well as continue to expand the brand in the UK and U.S., respectively.
“At the intersection of fashion and outdoor, Hunter introduces another elevated global brand to Authentic’s diverse Lifestyle portfolio,” said Authentic CEO Jamie Salter, in a statement.
Terms of the deal were not disclosed.
The investment arm of IKEA parent Ingka Group acquired the warehouse management software platform Made4Net.
As a result of the deal, Made4Net’s software will be deployed across IKEA’s 482 stores and fulfillment centers. Made4Net will continue to operate as an independent subsidiary of Ingka, with a headquarters in New Jersey. CEO Duff Davidson will remain at the helm of the company.
“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, head of retail at Ingka Group, in a statement. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”
European ecommerce aggregator SellerX acquired Elevate Brands, a U.S.-based aggregator.
The combined companies will be known as SellerX Group. It will comprise a portfolio that includes 80 Amazon-native private label consumer brands in categories including sports and outdoors, home, mobile accessories, pets and consumables. The portfolio will span over 40,000 products.
With the deal, SellerX Co-CEOs Philipp Triebel and Malte Horeyseck will lead SellerX Group, while Elevate Brands cofounders Ryan Gnesin, Jeremy Bell and Robert Bell will remain in key leadership positions.
“This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure,” said Triebel, in a statement. “By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”
Ecommerce aggregator Society Brands acquired Wolf Tactical, a tactical gear company.
Founded in 2017 by Tim Wu, Wolf Tactical makes products including DC belts, range belts to weighted vest and tactical backpacks.
"I started Wolf Tactical by myself as a side hustle with very limited knowledge of business and entrepreneurship. A combination of hard work and relentless learning allowed me to build it into a multi-million-dollar business," said Wu who will remain as brand president, in a statement. "With the help of Society Brands, I have access to untapped potential that I would not be able to achieve by myself.”