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Levi Strauss & Co Holiday Sales Lackluster, But Marks Improvement

Jan 28, 2021 12:34 AM EST

Levi Strauss
(Photo : Sean Gallup/Getty Images) Tariffs Tiff Between Trump And EU Intensifies

BERLIN, GERMANY - MARCH 08: In this photo illustration Levi's 501 blue jeans by U.S. clothing manufacturer Levi Strauss are seen on March 8, 2018 in Berlin, Germany. U.S. President Donald Trump has promised to sign into law tariffs on imported steel and aluminum today and the European Commission has vowed to retaliate with tariffs on Levi's jeans, Kentucky bourbon and Harley-Davidson motorcycles. Many analysts fear the tariffs could escalate and hence cost jobs on both sides of the Atlantic. The European Union and Canada are the world's biggest exporters of steel to the United States.

Levi Strauss & Co. barely survived 2020. It's holiday sales was lower than what it was used to, but it could have gone worse.

On Wednesday, January 27, the company's holiday-quarter sales represented a drop of 12%. While this is not savory, it marked an improvement from more than 20% decline in the previous period.

Levi's Online Sales Enough to Save It, In the Meantime 

The pandemic has led to many companies calling for Chapter 11 bankruptcies left and right. Levi, just like other companies, suffered from weak shopper traffic, as people lose their desire or their ability to shop as they used to.

There was even a report claiming the jeans company was likely to be affected greatly because the work-from-home setup makes people averse of wearing jeans. The CEO  Chip Bergh was even compelled to say they need to make their jeans looser and more fiting for relaxing at home. 

But the big loss was still partially offset by a double-digit growth of its online sales. 

At the same time, Levi's stock prices recently went up by more than 1% in after-hours trading after already falling for more than 4%. 

This is why Chief Executive Chip Bergh told CNBC that the results for the latest quarter even exceeded the company's internal expectations. Bergh even said that Levi nearly met its 'best-case' scenario with this performance. The scenario was set by the company when the COVID-19 pandemic first broke out and disrupted many operations and businesses of companies and retailers. 

"We pivoted very hard to [direct to consumer] and especially to e-commerce," Bergh said during a phone interview. "Our e-commerce business was profitable in the fourth quarter, and profitable for the full year," he added. 

READ MORE: Apple Stock Fell Amid High Earnings; Facebook Shows Unexpected Increase

Levi Still Wary of 2021

Levi's global digital sales can be described as more optimistic. The sales, which covered online sales of its merchandise at wholesale partners, already made up 23% of fourth-quarter sales. It was only 15% in the prior-year period.

Even if there is already a vaccine, the COVID-19 crisis shows no signs of relenting. New infection rates are surging, which means businesses are going to face more challenges down the road. Levi leaders are aware of this.

"The recent resurgence of the virus underscores that the ultimate impact of the Covid-19 pandemic remains highly uncertain," Levi said during in its earnings release. "The company expects that its business ... will continue to be significantly adversely impacted for at least the first half of 2021, and there remains the possibility of additional Covid-19 related inventory and other charges," the company added. 

Levi's laid off about 700 managers, or 15 percent of its global management headcount, back in July 2020 as it grappled with the harshness of the pandemic. Lower sales meant it cannot pay off its labor obligations.  

"It was a painful thing to do, but it was necessary," the CEO said at the time. "We knew we were going to be a smaller company."

READ MORE: Tilman Fertitta on Post COVID-19, 'It'll be the Roaring Twenties!'

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