Levi Strauss & Co (NYSE:LEVI) Q2 2019 Earnings Conference Call Transcript

Jul 09, 2019 • 05:00 pm ET


Levi Strauss & Co (NYSE:LEVI) Q2 2019 Earnings Conference Call Transcript


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Charles Victor Bergh

Global Direct to Consumer business was up 14%.

The Levi's brand remained strong and grew 10% this quarter. We grew in all three regions across men's, women's, tops and bottoms and continue to strengthen our lifestyle brand appeal with consumers around the world. In the second quarter, we again dominated Coachellas the go-to uniform for festival season, with Levi's 501 cut off shorts, which were up more than 50% this quarter taking center stage. Our successful execution of festival drove a 50% increase in impressions versus a year ago.

In May, we held a month long 501 day celebration focused on the birth of the Blue Jean with customization events taking place around the world and limited addition product designed in partnership with San Francisco native Heron Preston featuring Hailey Bieber as the face of the 501. We teamed up with BEAMS in Japan to create a Capsule collection combining our iconic design and craftsmanship with BEAMS esteemed Japanese style. And in Europe, we launched Use Your Voice, a new ad that celebrates the power of individuals in igniting change.

I'll now walk you through our second quarter results in the context of our three where-to-play strategic choices which are drive the profitable core, expand for more and become a leading world-class omnichannel retailer. First, on the profitable core business, which as a reminder is comprised of men's bottoms, our top 10 wholesale customers and our top five mature markets. Our total men's bottoms business, our biggest business was up 5% for the quarter, performance focus fabrics with higher stretch content and tapered silhouettes continue to resonate with consumers.

The 502, 512 and 514 drove global growth, while newer products such as the Levi's Engineered Jean performed well internationally and Dockers grew 1% globally. Our top 10 global wholesale accounts collectively grew 6% and our top five mature markets collectively grew 6%, inclusive of our largest market, the U.S., which was up 1% while the other four markets grew 20% collectively.

Our second strategy is to diversify the business by expanding for more into tops, women's, underpenetrated markets and with our value brands. While we've made good progress, the future growth opportunity in these areas remain significant. Our total women's business grew 16% in the quarter, which was the 16th consecutive quarter of growth in women's with each of the last 10 quarters being double-digit growth. The business grew across all regions and channels, fueled by the success of our high-rise fits and healthy sales of women's tops. Tops for both men and women continue to perform well, our total tops business grew double-digits again this quarter of 14%, driven by strong performance in sweatshirts and trucker jackets.

Graphic tees grew slightly in the quarter. While tees remain a big business for us. We're still selling the graphic tee per second. Our growth in tops this quarter went beyond tees demonstrating our ongoing diversification in the category. And our Signature and Denizen brands collectively delivered 9% growth on top of