Levi's plays best in 'the center of culture': Exec on Q1 success

Shares of fashion brand Levi Strauss & Co. (LEVI) are rising as high as 12% at the start of Wednesday trading after posting strong first quarter sales figures, namely direct-to-consumer (DTC) sales growing by 16%.

Levi Strauss chief financial and growth officer Harmit Singh joins Yahoo Finance Executive Editor Brian Sozzi for a conversation about the denim maker's consumer observations and boosts from cultural moments.

Army, good to see you. Um so I was telling my team when this results hit the market, they are so different than what I heard from Nike. I mean, night and day. Like, explain this to us. Why were you able to drive double digit gains against a backdrop of uncertain consumer?

Yeah, no, uh, first thanks for having me, Brian and you're right. You know, we started the year with a bang with a cultural moment, launched our first Super Bowl ad in two uh decades and beginning of a wonderful global market campaign. Last year it was about music with Beyonce. This is this year is about music and sports because we play best when we're in the center of culture. You know,

we're accelerating our top line and our bottom line is largely driven by a couple of factors. Number one, we're globally diversified. We are leaning into, you know, the trends and actually leading trends. Our product pipeline has never been stronger. We are executing a lot better. And so I think, you know, it's a great moment and we're not done. I mean, we have a long runway for growth.

Um you know, we're, you know, as part of my responsibility growth officer, one of the things I've done recently is redefine the Tam working with the team. You know, uh originally we were talking about a addressable market of 100 billion, which is largely denim. We have we don't even play in the what I call luxury denim category, which is about 10 billion. That time has been expanded 15 times to a trillion five. And we're leaning in with women, we're

leading with tops and so I think, you know, uh those are all the factors really, uh, you know, allowing us to accelerate top line, bottom line, create real sustainable value.

Are people just tossing their athleisure in the trash and upgrading their denim?

You know, people, um, you know, the world's getting a lot more casual. Look at you. Yeah, look at me. I'm wearing blue cash. That's true. And so I think that's the overall trend number one. Number two, if you lead the fashion friends and lead silhouettes, right, you know, it's all about loose and baggy today. It was about slim and skinny. It's probably headed to a little bit more of a straight. But I think as long as you lead with the trends, you know,

I'm not going back. I can't do it.

the trends are relevant to what he or she wants. Um, and we execute really well. I think that's where, you know, uh we are growing market share and leading with market share and all that good stuff.

Well, is there just a new denim replacement cycle underway?

Yeah, uh I I would say yes, uh but what we are seeing is and the consumers been very resilient, the consumer gravitates to newness and you know, especially if the newness drive, you know, is in sync with trends that we're seeing, um, you know, across all the fashion walks and things like that. And so, uh, you know, being a leader in denim and now expanding beyond denim, um you know, even beyond yoga as an example had an outstanding second quarter, last quarter was great and this

uh quarter was also brilliant. I think those are the factors that are making a difference and I must really shout out to our teams on the ground, the people who execute are, you know, are uh, you know, and uh interact with our consumers, our store associates because DDC, which is our own stores and e-commerce is now at an inflection point, you know, it's over 50% of the business headed towards being more like 55%. And we're doing that with what I call the power of the end, which is growing wholesale

at the same time as growing DDC.

investors are waking up to you, Harmi. I mean, the markets are ripping higher. We got a two-week ceasefire between the US and Iran war. On days like this where do you breathe a large sigh of relief that this is now, we do have this two- week pause. And then secondly, do you get a call from the team at Macy's say, hey, you know what, I feel a little more confident to order things for the fall. Place those orders, Army.

Yeah, no, it's it's a sigh of relief, uh, uh, clearly. Uh, but we are all, you know, learning to live with macro uncertainty. Um and, uh, you know, companies that and we also realized that as wallets get tighter, as consumer confidence, uh you know, uh is a little volatile, we have to work harder to earn our consumers' trust. Uh but your question about customers, I think I'll pivot to DDC first is making a big difference to wholesale. They see stuff working in our own stores and e-commerce. They mean our customers,

and they then respond. You know, as part of Super Bowl, we had some of our key customers come, um you know, and participate in the activation uh and, you know, it was a proud moment because they all said, you bring traffic to our stores, you have the styles, etc. And I think I think that's what you're seeing is the activation of that confidence in what we're rolling out. So, I hope I get the calls from the Macys, uh and uh and the calls and the rest. But at the end of the day, a diversified business that not only drives our own stores

as well as our e-commerce, but also whole wholesale is is critical for the success of the of the business.