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Levi Strauss awaits end-2021 for pandemic recovery, cuts inventories

Cons. Discr. - Apparel 404 Cons. Discr. - Retailing 357 Coronavirus 472 Earnings 566 U.S. 4856

Iconic denim clothing maker Levi Strauss reported a 12% year over year decline in revenues in FQ4’20 (to Nov. 29). While that was a slower rate of decline than the prior quarter it had been flattered by an extra trading week and the Black Friday sales event, which together added three percentage points to growth. 

The firm’s sales have been hurt by store closures, in common with most other apparel retailers as outlined in Panjiva’s Jan. 18 research, with recovery likely to take a few quarters yet. Indeed, the firm has stated that if “conditions do not worsen, (it will) return the company to pre-pandemic revenues by the end of 2021 (though there) remains the possibility of additional COVID-19 related inventory and other charges“.

With regards to inventory, Levi’s cut back inventories by 8% year over year “reflecting the company’s ongoing inventory actions in response to the COVID-19 business disruption and flexibility resulting from the high percentage of sales derived from core products.

That control can be seen in the firm’s supply chain activity, with total U.S. seaborne imports linked to the firm having declined by 14.8% year over year in Q4’20, Panjiva’s data shows, though the rate of contraction slowed to 4.6% in December. The latter included a 7.3% year over year expansion in imports of denim jeans pants and a 39.8% surge while shipments of shirts / T-shirts dipped 2.2% lower. 

Jeans pull Levi’s closer to recovery in December

Chart segments U.S. seaborne imports linked to Levi Strauss by product. Source: Panjiva

Levi’s imports did slightly worse than total U.S. seaborne imports of denim which declined by 9.8% in Q4’20 and actually saw an accelerating decline of 13.7% in December. PVH, owner of the Calvin Klein and Tommy Hilfiger brands, experienced a 35.9% surge in supply chain activity in Q4’20, though shipments in December were unchanged from a year earlier. Shipments of denim products linked to H&M meanwhile dropped by 39.7% year over year in Q4’20 after rising 5.3% in Q3’20, potentially reflecting style decisions rather than supply chain issues.

Levi’s lags PVH, beats H&M in denim

Chart segments U.S. seaborne imports of denim products by consignee. Source: Panjiva

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