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Levi's CEO: Americans are still wearing jeans despite working from home during the coronavirus pandemic

·Anchor, Editor-at-Large
·6 min read
In this article:
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If he occasionally wears a pair of slim fit cotton joggers while doing a Zoom call from his home office, Levi’s (LEVI) CEO Chip Bergh isn’t letting on in an interview with Yahoo Finance.

“It’s a myth that needs to be dispelled,” Bergh says on the death of jeans as mostly everyone works from home amidst the COVID-19 pandemic —likely rocking a pair of those aforementioned comfy athleisure bottoms.

Bergh — a U.S. Army veteran who is credited with creating the Swiffer mop in a nearly 30-year career at P&G — comes armed with some compelling stats to make his case.

“We read data all the time. If you look at the data for what consumers are wearing from the waist down, non-active apparel is still 70% of all waist-down wear. And of that, denim is about 50% of it. So the total denim category is about 30% of all apparel bottoms, if you will — the things that you're putting on your legs and your butt every single day. Denim is about 30% of it,” Bergh confidently states.

But Bergh — eschewing his trademark Levi’s denim button down for a light grey T-shirt (and jeans, as he notes) in an interview from our respective home offices (this journalist was in a pair of Under Armour athleisure bottoms) — doesn’t stop there on a subject that clearly fires him up.

“During the pandemic, we've run research around the world on a routine basis — and we've been doing this long before the pandemic — called Who What Where. And we track what people are wearing. In April, 50% of the people globally around the world, the peak of the pandemic, were wearing denim. The other 50% were in pajamas, athleisure, and other things — or nothing. And every single month since April, the trend has been more towards typical wear. And denim has continued to grow, and those other categories —pajamas, athleisure, and other things — have declined as people are going back out again — walking the dog or going out and shopping and doing those kind of normal things,” stresses Bergh.

Fair enough. Bergh isn’t alone in being cautiously optimistic on the future of denim.

“It seems too early to call the death of jeans. It’s hard to kill categories, especially those that serve a role. Work from home in the winter will look very different,” says BMO Capital Markets retail analyst Simeon Siegel.

But, that doesn’t remove the fact that the denim industry has had a rough first half of 2020 as the pandemic wreaks havoc on retail.

NEW YORK, NEW YORK - JANUARY 13: Levi Strauss & Co president & CEO Chip Bergh (L) and Snoop Dogg attend the 5th Annual NRF Foundation Gala at the Sheraton New York Times Square on January 13, 2019 in New York City. (Photo by Dia Dipasupil/Getty Images)
NEW YORK, NEW YORK - JANUARY 13: Levi Strauss & Co president & CEO Chip Bergh (L) and Snoop Dogg attend the 5th Annual NRF Foundation Gala at the Sheraton New York Times Square on January 13, 2019 in New York City. (Photo by Dia Dipasupil/Getty Images)

Retail stores, indoor malls and outlets have only recently begun to reopen. Important denim sellers such as J.C. Penney have filed for bankruptcy. Its rival across the mall Macy’s is closing scores of stores, pressured by the pandemic. And then there is the U.S. consumer itself, dealing with the twin blow of a nasty recession and an uncertain presidential election. For those that remain employed, the attire of choice has tended to be butt and desk chair friendly athleisure bottoms rather than stiffer jeans.

The collective trends have taken their tolls on the primary jean makers.

Levi’s second quarter sales fell 62% year-over-year to $498 million. The company posted a rare adjusted loss of 48 cents a share compared to a 17 cent a share profit last year. Sales in Levi’s Americas business dropped 59% to $283 million. The division incurred a 38 million operating loss — a year earlier it notched an impressive $102 million operating profit.

Over at Wrangler and Lee maker Kontoor Brands, second quarter sales declined 43% year-over-year to $349 million. The company’s adjusted loss per share tallied 22 cents versus a year ago profit of 96 cents. Sales in the U.S. fell 41% to $288 million.

Shares of Levi’s and Kontoor Brands are down 35% and 50% year to date, according to Yahoo Finance Premium data. The S&P 500 is up about 4%.

Keep in mind denim as a category has been steadily growing by low-single digits for years. So to see sales fall off a cliff as they did in the second quarter is startling. And how the sector concludes 2020 as back to school and holiday shopping remain in flux — both key denim buying periods — is anyone’s best guess.

“No, I don’t think jeans are dead at all. Just the opposite,” says veteran retail executive and JRK Worldwide Enterprises founder Jan Rogers Kniffen.

Kniffen thinks there are several trends that could be much needed tailwinds to denim companies this year.

“Outerwear is going to be important this fall, along with jeans, heavy sweaters, probably buffalo check flannel shirts, boots, both cowboy and hiking,” Kniffen points out.

Others in retail think that as people return to work and some form of social interaction, sales of jeans will regain their rightful place in closets.

“Remember people can go out. They can dine outside. They can shop. I think they will opt for jeans in this setting. The wear-to-work work segment will be the share loser,” explains retail analyst and JJK Research founder Janet Kloppenburg.

As for Bergh, while he downplays the threat of athleisure he has long pivoted Levi’s to offering comfier jeans. He says that will continue to be a driving force among Levi’s designers.

“Stretch and comfort will always be important. It started on the women's side of the business, but it's gone to the men's side of the business and stretch is in about 70% of our men's product today,” Bergh adds.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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