The Pandemic Has Been a Downer for Denim
Jeans Companies Face Financial Hardships
During the ongoing pandemic, people around the world have spent time in leggings and sweatpants, leaving their jeans tucked away in drawers. This trend has left jeans companies feeling squeezed. Since April, three jeans brands—True Religion, Lucky Brand, and G-Star RAW—have declared bankruptcy. Jeans giant Levi Strauss & Co (LEVI) saw a 62% decline in second-quarter revenue and is making plans to cut 15% of its corporate workforce—about 700 jobs.
Jeans have long been a wardrobe staple popular across genders and ages. Denim sales have ticked downward over the past five years, but the pandemic has caused this trend to accelerate.
The Rise of Athleisure Wear
Instead of jeans, people are turning to athleisure wear. Even for work meetings over video chat, many are wearing formal tops with casual, comfortable pants. Retailers like Lululemon (LULU) and Gap (GPS) (which owns Athleta) have seen overall sales decline, but report that sales of leggings and sweatpants have gone up during the pandemic.
Jeans retailers are not alone in their financial struggles. Though sales of stretchy pants are on the rise, overall apparel sales have plunged nearly 40% this year. Brooks Brothers and Ascena Retail Group (ASNAQ) (which owns the Ann Taylor brand) both specialize in work clothes and have both recently filed for bankruptcy. Sales of makeup, formal shoes, and other items people turn to for work and other formal events have also fallen.
Heading into the fall, many offices and schools across the country have announced plans to stay fully or partially remote.
Back-to-school season normally gives a boost to denim sales, but that might not be the case this year. Investors and designers are wondering whether consumers’ longstanding love of jeans will ever come back, or if leggings and sweatpants will reign supreme—even if and when people return to school and the office.
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