American Eagle, Hole and Levi Beyonce Sydney Sweeney denim advert returns

Levi Strauss CEO Michelle Gass was out for a run in San Francisco final March when she first heard the track “Levii’s Denims” from Beyonce’s newest album, “Cowboy Carter.”

“Actually, I received chills,” Gass recounted to CNBC, including the name-check represented a “as soon as in a lifetime” advertising and marketing alternative she could not afford to squander. “She is likely one of the most celebrated and influential artists of our time. … We requested the query, ‘May there be one thing extra?'” 

Six months later, Levi introduced Beyonce would star in a new world advertising and marketing marketing campaign. Then, a sample that is repeated itself since Levi invented blue denims greater than 150 years in the past occurred once more: rivals raced to catch up.

Hole and American Eagle launched their very own star-studded campaigns the next summer season in a bid to promote extra denims. Hole partnered with lady group Katseye in its viral made-for-TikTok “Milkshake” advert, whereas American Eagle selected actress Sydney Sweeney for its controversial “good denims” marketing campaign. Simply earlier than Thanksgiving, American Eagle launched one other celeb marketing campaign with a distinct kind of star: Martha Stewart.

Some smaller manufacturers that may’t pay for a reputation like Beyonce have gotten free advertising and marketing simply from celebrities sporting their denim. In late August, Kylie Jenner posted an image of herself in True Faith denims, resulting in a spike in gross sales, CEO Michael Buckley instructed CNBC. He known as it the “final praise.” 

Industrywide, manufacturers aired practically 70% extra denim TV spots this 12 months in contrast with final, as the worldwide denims market swelled to $101 billion, up 28% since 2020, in accordance with information from TV outcomes firm EDO and market analysis firm Euromonitor Worldwide. 

Behind the large campaigns had been hints about every retailer’s methods and challenges. American Eagle is attempting to win over extra males. Levi’s desires to court docket extra girls. Hole is working to search out relevance amongst a brand new technology of buyers. 

However taken collectively, the advertising and marketing reveals the lengths corporations are going to dominate a rising denim class that’s nonetheless up for grabs — even when Levi might have created it. In an financial system the place many patrons are pondering twice earlier than shelling out for a brand new pair of denims, retailers are scrapping tougher than ever to win each greenback they’ll. 

“There positively is a denim conflict. There is a conflict for folks’s consideration. There is a conflict for folks’s spend,” mentioned Neil Saunders, retail analyst and GlobalData managing director. “Who has probably the most snug denim? Who has the softest really feel? Who has the perfect cuts? What suits me nicely? There’s rather more consideration within the buyer shopping for course of than for another merchandise, so it does make it rather more of a battle between the retailers.” 

Like all issues in trend, denim goes by way of cycles. It is a stalwart garment in any closet, however generally it is in trend, and generally it isn’t. 

The final time denim was this huge was through the 2000s when manufacturers like True Faith and Joe’s Denims had been a favourite amongst A-listers earlier than athleisure turned extra well-liked and remodeled informal dressing. 

“After we got here out of Covid, I believe to me that is actually when it began, after we began to see shoppers mainly say, ‘Look, I need to really feel like I’m not sitting in my home anymore, I need to really feel like I get dressed as much as exit,'” mentioned Janine Stichter, a retail analyst and managing director at monetary companies agency BTIG. “That sort of began to carry in regards to the denim cycle that we’re in proper now.” 

In previous denim booms, sure cuts dominated, like skinny denims within the 2000s and bell bottoms and flares within the Seventies. This time round, any minimize goes, and shoppers are transferring past denims to a greater diversity of denim clothes, creating an even bigger market alternative. 

“Now we’re seeing every little thing from vast leg to barrel leg to bootcut. All of it sort of has a spot,” mentioned Stichter. “That is a cause why corporations may need to make investments behind it, as a result of there’s simply so many types that buyers are accepting proper now.” 

Denim has been a brilliant spot for retailers in a sluggish attire market, however they’ve needed to struggle tougher for client consideration as extra rivals spend money on the area. Youthful buyers are prioritizing worth over model loyalty, cash-strapped shoppers are pulling again on new garments and the class has grown more and more aggressive, analysts mentioned. 

Main attire gamers like Levi, Hole and American Eagle aren’t simply competing with each other. They’re additionally vying towards rising manufacturers, fast-fashion retailers and thrift shops, the place many Gen Z shoppers may go for a classic pair of denims as a substitute of shopping for new. 

To chop by way of all the noise, corporations wanted to go huge with their advertising and marketing campaigns, mentioned Saunders. 

“The entire world and his spouse are on denim in the mean time. Everybody’s pushing and speaking about it, so they only wanted to do one thing that was a little bit bit extra edgy,” Saunders mentioned. “They did not need to play it secure, as a result of that is probably not going to make noise available in the market.”

For Hole and American Eagle, each legacy mall gamers with fading relevance, the denim play goes deeper than simply driving income. In a method, they’re reintroducing themselves to a brand new technology of shoppers as they work to reclaim their standing in trend and tradition. 

“Leaning into denim and having these huge campaigns round denim is a part of a wider push to reinvigorate the manufacturers, and I believe that is why they’ve gone all out on it, as a result of they see denim nearly as a halo that may shine gentle on the remainder of the model and the issues that they are doing,” mentioned Saunders. “It is the relevance play as a result of … American Eagle had change into a little bit bit stale and was scuffling with the outcomes, Hole is within the midst of a reinvention to actually attempt to make the model rather more related, particularly to youthful shoppers.” 

In an interview with CNBC, Hole CEO Richard Dickson mentioned the Katseye marketing campaign allowed the corporate to achieve a large set of shoppers in a strategic method.

“It has completely resonated with Gen Z, who continues to be within the discovery section of the Hole model,” he mentioned. “However what it additionally did is, it strengthened loyalty with our core client. So once more, we’re bridging the technology hole by interesting to a number of audiences.”

Whereas the market has been flooded with denim ads, the content material of the advertisements is having a huge impact on engagement, EDO mentioned. The effectiveness of denims advertisements, measured by client engagement like searches and web site visits, improved 9% 12 months over 12 months from January by way of August, suggesting the artistic messaging behind the spots issues greater than frequency, EDO mentioned. 

Levi’s denim advertisements had been 304% more practical than the typical clothes advert, even after it reduce on airings by practically a 3rd, mentioned EDO. 

Retailers do not disclose how a lot they spend on particular person promoting campaigns, however these investments are a part of an organization’s promoting, normal and administrative prices, which they disclose in filings. 

In Levi’s fiscal 12 months ended Dec. 1, 2024, which covers the debut of its Beyonce marketing campaign, the corporate’s SG&A bills had been practically $200 million larger than the earlier 12 months, greater than half of which was spent within the quarter the marketing campaign debuted. The corporate beforehand acknowledged the Beyonce advertisements contributed to the upper prices, and Gass instructed CNBC it was a guess price taking.

“The Beyonce marketing campaign had a fantastic return for us,” mentioned Gass. “After we have a look at our enterprise outcomes, our gross sales are rising, however our earnings are rising as nicely general, so we be ok with the funding.”

Since Gass took over, successful over extra feminine buyers has been on the core of her technique, and the corporate’s Beyonce marketing campaign helps it obtain that purpose. Final October, days after the marketing campaign launched, Levi mentioned its girls’s enterprise represented about 35% of general income. A 12 months later, it is about 38%. 

“It is driving plenty of our progress. That needs to be half of our enterprise,” mentioned Gass. “Based mostly on the momentum we’re seeing, there is no cause why we will not obtain that.” 

True Faith, which is privately held and does not disclose its financials, instructed CNBC denim gross sales rose 38% between Aug. 20 and Aug. 22, the time interval by which social media influencer Alix Earle and Jenner made natural posts in regards to the firm’s denims. 

“When Kylie posted, not solely did she put us in a narrative, however she put us in a carousel as a tough publish on her wall. She most likely costs $500,000 to 1,000,000 {dollars} for that,” mentioned Kristen D’Arcy, True Religions’ chief advertising and marketing officer and head of digital progress. “The outcomes of these posts, particularly on girls’s denim gross sales, was fairly unbelievable.”

Since American Eagle’s and Hole’s campaigns are newer, it is too early to say how they’ve affected long-term gross sales. However they’ve already made their mark in tradition and on Wall Avenue. 

When American Eagle introduced its marketing campaign with Sweeney, the corporate turned a meme inventory sensation, solely to see these features erased after it confronted criticism over the advert’s tone and messaging. Later, President Donald Trump weighed in and known as it the “hottest advert on the market,” main the inventory to soar as soon as once more. 

“It was billions of impressions. I imply, it was wonderful what occurred. It struck a brand new dialog,” Jennifer Foyle, president and govt artistic director for AE & Aerie, instructed CNBC in an interview. “After we launched that marketing campaign, we knew it was going to be thrilling nevertheless it actually took off.” 

Some information studies urged foot visitors on the firm’s shops fell within the aftermath of the advert. Nevertheless, the corporate later mentioned visitors throughout channels had been “constantly optimistic all through August,” the month after the marketing campaign launched.

Following the Sweeney advert and one other marketing campaign with Kansas Metropolis Chiefs tight finish Travis Kelce, the corporate mentioned in early September it had seen “significant enchancment within the enterprise,” with progress in comparable gross sales and the acquisition of 700,000 new prospects. 

“It positively helped our visitors. We positively gained new prospects,” mentioned Foyle. “Have in mind, these new prospects do not at all times come proper again and store, proper? So, positively there will be a halo impact for positive as we head into This autumn and future seasons.” 

Following the controversy over the marketing campaign, American Eagle apparently eliminated one of many advertisements from most of its social pages – the one the place Sweeney discusses genes being handed down from father or mother to offspring that incited probably the most blowback and comparisons to eugenics. The spot is now solely seen on American Eagle’s Fb web page. An organization spokesperson denied the retailer took the advert down, saying “as soon as content material is launched, it is out for the world to see.” 

American Eagle declined additional touch upon the Sweeney controversy. A couple of week after the advertisements got here out, it posted an announcement on its Instagram web page saying the marketing campaign “is and at all times was in regards to the denims.”

When American Eagle issued fiscal third-quarter outcomes on Tuesday, it was the primary time buyers received to see a full quarter of influence from the Sweeney and Kelce campaigns. Whereas the corporate mentioned that the campaigns are “attracting extra prospects” and creating extra consideration across the model, the outcomes confirmed they are not but a serious income driver.

At American Eagle’s namesake banner, the place the campaigns had been centered, comparable gross sales grew simply 1% within the three months ended Nov. 1, worse than the two.1% analysts had anticipated, in accordance with StreetAccount. 

In the meantime, SG&A bills had been up by about $35 million 12 months over 12 months, due largely to its campaigns with Sweeney and Kelce. The rise in prices did not have a serious influence on American Eagle’s working margin, which got here in larger than anticipated.

Final month, Hole mentioned comparable gross sales at its namesake banner surged 7% within the quarter after the Katseye advert got here out — greater than double what analysts had anticipated, in accordance with StreetAccount.

“The model noticed progress in [average unit retail], consideration, natural impressions, new prospects, so producing important visitors,” Dickson instructed CNBC. “Double-digit progress in denim, 8 billion impressions, so we’re more than happy and excited in regards to the long-term proposition and the continued progress the model is making.”

In the meantime, the marketing campaign has been a viral sensation, racking up 50 million views on YouTube alone within the final three months. That is 5 instances the ten million views American Eagle’s Sweeney advert noticed on the platform in 4 months. Nonetheless, each of the advertisements mixed do not come near the engagement Levi’s Beyonce marketing campaign has seen on YouTube. The 4 “chapters” of the marketing campaign, which had been launched between final September and August, have garnered a staggering 85 million views mixed. 

“Levi’s is unquestionably successful the conflict general. I imply, that is Levi’s dwelling turf, you are enjoying within the dwelling stadium, in order that they have an inbuilt benefit,” mentioned Saunders. “They’ve been very savvy about creating the tradition round denim. They have arguably the most important celeb on their crew, they usually’ve widened the approach to life aesthetic, in order that they’ve actually led this.”