Levi lost 62% sales in Q2 as the denim maker cannot maintain sales through an online platform to compensate for the stores shut down due to the COVID-19 pandemic. The consumer behavior has shifted drastically to buy more comfortable indoor clothing than the outdoor type dominated by denim and jeans.
Levi’s has started to re-opening its stores. The traffic is still lagging compared to the pre-COVID 19 pandemics. The company announced a net loss of $394 million compared to a $29 million net income a year ago. The revenue dropped by 62% to $498 million from $1.31 Billion a year ago. The lost revenue from the store was offset by online sales, which grew about 25%. The sales were down by 59% in America, 68% in Europe, and 61% in Asia.
Levi’s stock has dropped 40.36% from a year ago compared to a 5.71% gain in the S&P 500 index. Levi’s stock has underperformed the market while the volatility remains similar. Levi’s market segment in casual and outdoor-focused clothing has damaged their sales as fewer people spend outside for non-essential activities.
However, Lululemon’s stock has significantly outperformed the market with 64.21% over one year while Nike’s stock only gained 9.71%, similar to the S&P 500 index. This shows that indoor and fitness-oriented clothing, Lululemon’s major market segment, survives and thrives in pandemic crisis. Consumers prefer to stay active indoors with comfortable yet fashionable clothing.
