Levi’s says it could take a while before consumers are ready to toss aside a pair of comfy baggy jeans for dressier clothing.
“The casualization trends that have been accelerated by the pandemic globally are here to stay, and the denim cycle we started pre-pandemic is continuing to drive growth,” Levi Strauss () CEO Chip Bergh told analysts Wednesday on a call discussing the company’s third-quarter results.
The cycle he’s referring to was the shift away from skinny jeans, which dominated for over a decade, and back to wider leg and baggier jeans that were in vogue in the 90s.
As consumers refresh their wardrobes with new clothing, the denim seller said it’s actively adding all kinds of jeans, especially the comfy looser styles.
Levi’s reported sales in the quarter were up 41% from a year ago to $1.5 billion. Unlike many other brands that are facing delayed inventory shipments due to global supply chain problems, Levi’s said it sources from 24 countries and was therefore able to mitigate supply disruptions happening in any one part of the world.
“As our society has been growing increasingly casual, we expect to see more jeans to be worn at more formerly dressier situations, like the office, once more people return to in-person work,” said NPD apparel analyst Maria Rugolo.
While the pandemic-driven shift in sartorial norms seem to favor Levi’s denim business, the company might still be challenged by rising prices for a key raw material — cotton.
Cotton prices have touched new 10-year highs, joining a long list of booming commodities and raw materials. Analysts cited several factors, including extreme weather such as droughts and heat waves, for damaging cotton crops in the United States. The US is the world’s leading cotton exporter.
It remains to be seen if the surge in raw cotton prices could eventually be passed along to consumers in the form of higher prices on jeans, T-shirts and other clothing.
Levi’s chief financial officer Harmit Singh told analysts during the call that the company had already locked in cotton prices though the first half of 2022 and didn’t expect to see an impact of higher prices until then.