Levi’s stock surged thanks to “casualization” and an always-fashionable supply chain

Cotton comeback… High-waisted jeans are in at Levi’s. Levi’s lifted its annual forecasts after last quarter’s sales blew past pre-pandemic levels for the first time. Rising cotton costs have caused shares of retailers like H&M and Gap to fall over the past six months. But Levi’s stock surged 9% yesterday thanks to the denim powerhouse’s strong sales and proactive supply chain.

Casual clothes, serious supply chain… Levi’s is cashing in on denim demand. The overall apparel market has outgrown its pre-pandemic size, and denim sales have grown even faster. Levi’s leaned into the jean-aissance by investing in Levi’s-branded stores and embracing the post-pandemic “casualization” trend (think: baggier fits and yoga-wear). But there’s another secret to Levi’s success: smart supply-chain management. Here’s the skinny:

• Splitting at the seams: The spread of Delta has caused widespread factory shutdowns in Vietnam, where Nike makes half its shoes, Everlane produces 40% of its clothes, and Adidas gets 28% of its kicks. Retailers’ plans unraveled.
• Spread the threads: Levi’s makes only 4% of its products in Vietnam. The rest are made in 24 other countries.
• Never miss a stitch: The supply shortage cost Levi’s just $10M last quarter — out of its $1.5B in sales. Adidas, on the other hand, could lose $600M from supply shortages in the second half of this year alone.