Levi Strauss CEO Chip Bergh told CNBC's Jim Cramer on Thursday that a historically hot summer affected his company's denim wholesale figures.
2023 saw the hottest summer on record, and Bergh said Levi's wholesale customers have a narrow assortment of the brand's products, so they weren't able to properly adapt to the weather changes.
"They tend to sell mostly blue jean bottoms, and it's hard to sell a pair of Levi's blue jean bottoms when it's 110 degrees outside, and I think that did kind of contribute to the softness that we saw in wholesale," Bergh said.
Bergh added that the Levi's direct-to-consumer business fared much better this quarter, and the company's own stores were able to put out more weather-appropriate products like shorts and dresses.
In its Thursday earnings report, Levi's cut its profit outlook for the rest of the year after a steep drop off in wholesale revenues. However, the company did see a bright spot in direct-to-consumer sales.
Bergh said Levi's is "cautiously optimistic" going into the holiday season, but emphasized that a tough economic macro environment has been impacting business. He said Levi's value businesses, largely sold in stores like Walmart and Target, were down this quarter.
"That middle income moderate income consumer, they're making tough budget choices right now, and it's negatively impacting apparel and denim right now," he said. "We've got a lot of strengths to lean on, we've just got to get through this economic period and work with our wholesale partners to get that business growing again."
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