Deep Dive
Shownotes Transcript
Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. Even if you aren't a Beyonce, Taylor Swift, or even a college football fan, you've seen the effect each has had on Western wear. Cowboy Carter dropped in true Queen Bee fashion more than a year ago in March 2024, and we're still talking about it. It's a Grammy Award winning album of the year, not to mention Best Country Album.
Taylor Swift's ERA's tour started in March of 2023 and ended more than a year later. Concert goers were decked out in friendship bracelets, anything that sparkled, and of course, cowboy boots.
And if you've been to any SEC football game, cowboy boots will let everyone know this ain't your first rodeo. And no, you don't know anyone with a pair of white cowboy boots with LSU woven on the side. Not to mention Yellowstone, 1883, and if I'm dating myself, Walker, Texas Ranger.
But let's go back to the beginning. Beyonce, Cowboy Carter continues to thrive. The tour has kicked off and yes, the conversation surrounding Beyonce's twang set to music with a whole lot of guitar strumming and woos continues.
A search of the Internet will show fans blazing in head-to-toe country chic. Now, you're listening to this thinking, Julie, what does this have to do with the economy or stocks? Because that's why I tune in to Seeking Alpha. Well, here we are. Yes, there has always been a demand for Western wear. Who doesn't love a Canadian or Texas tuxedo?
You know, the cowboy boots, the wide brim hats, leather belts and well-fitting jeans. But how much has the industry grown or how much is it projected to grow? Track 17 on the Cowboy Carter album is simply entitled Levi's Jeans. And of course, there's the commercials with Beyonce strutting around in Levi's.
Levi Strauss president and CEO Michelle Gass had this to say on the most recent conference call in April. While many brands aspire to be at the center of culture, we are firmly there. You can see that through our partnership with the most influential artist of our generation, Beyonce. Since launching Reimagine in September of 2024, the campaign has generated more than 4.3 billion impressions,
and more than $65 million in estimated earned media value, continuing to help us drive equity gains with men and women across our market. Now, we do have to point out that Levi is down 27% over the past year. So if you're an investor, you may say, the math ain't mathing. Okay, that's fair. But long-term, over the past five years, Levi is up 36%. By the way, I'm not promoting a particular stock. I'm just giving you facts.
According to Transparency Market Research, before Cowboy Carter was released and also before the Arras tour, Westernware was an $80 billion market in 2022. And at that time, the firm projected it to grow to $136 billion by the end of 2031. But let's look at another stock, Boot Barn Holdings.
The retail store offers Western and work-related footwear, apparel, and accessories. Boot last reported in January and is set to report again later this month.
Boot Barn is expanding its store base and has a commitment of new store growth of 15% annually. On the earnings call, a J.P. Morgan analyst asked management to elaborate on traffic demand trends in January. Looking at the specific departments in January, we saw an acceleration in both men's and women's western categories.
specifically boots and apparel. So we saw nice business in those four major merchandise categories. As we look forward to the remainder of the quarter, there's nothing that we're seeing
That makes us feel any different about the business. It was a strong start to our fourth quarter, and we think that'll continue. That was John Hazen, the interim chief executive officer. Year-to-date boot is down 27 percent. Over the past year, it's up about 5 percent. And long-term, over the past five years, it's up 505 percent.
Toccova's is another brand, and no, it's not publicly traded, but a quick look at their website showed cowboy boots for women ranging between $250 and more than $500. Oh, the price tag.
The company was started by a native Texan a decade ago. The boots are still designed in Austin and crafted in Mexico and Vietnam. Tecova says it's the fastest growing Western brand in the world. And finally, Ulta. I know what you're thinking. Is it?
that a beauty store? Yep, it sure is. But if you have the app, open it or just go to the website. On the app, you'll see a pop-up that says Ulta is the official beauty partner of the Cowboy Carter Tour. The site highlights what you need to buy to have the perfect Cowboy Carter glam. Not to mention the fact that if you want to buy sacred in a store, you know, Beyonce's hair care brand,
It can only be found at Ulta, ticker symbol ULTA. Makeup brands like MAC, owned by Estee Lauder, a publicly traded company, and Hourglass Cosmetics, owned by Unilever, also public, are highlights on the list. But you may be thinking, what about tariffs? Are these companies prepared? What is their exposure?
We'll consider two companies mentioned earlier, Levi Strauss and Boot Barn. Here's what Harmeet Singh, the chief financial and growth officer of Levi Strauss, had to say on the conference call on April 7th. For now, our full year outlook remains unchanged and includes no impact from the proposed tariffs. Our Q2 outlook remains consistent with our internal plan.
The impacts of tariffs will have a minimal impact to our margin structure in the quarter as most of the product for spring/early summer is already in the U.S. As a reminder, Q2 is seasonally our lowest quarter for revenue and margins in the year. We look forward to an update when Levi reports earnings on July 1st after the market closes.
Boot is set to report sooner on May 14th. Hazen spoke about tariffs on that same call from earlier. Yeah, we're, as a reminder, we're 30% on order with China, 25% on order with Mexico. China's more rubber-soled performance, boots and apparel, of course. And then Mexico is where...
make our leather-soled cowboy boots and and we're the you know some of the best leather-soled cowboy boots are most of the leather-soled cowboy boots are made we are testing other countries but we're not going to overreact right now there there are great boots
boots made in Mexico and there's, you know, supply chain efficiencies we're looking at in terms of how we bring those boots up and how we go about manufacturing those boots and then putting some pressure on our vendors. And then, you know,
We will maintain margin. So we'll have to pass. If there is a significant tariff, we're going to have to work on getting better pricing, some economies of scale on the supply chain, and perhaps passing some of that price increase onto the customer to maintain our margin profile. By the way, did you know Seeking Alpha has the transcripts and recordings for earnings calls? That's where I got all the audio for this piece. So I'll leave a link in show notes for Ulta's earnings call back in March.
Earlier, I said that the forward outlook shows more than a $50 billion boom for the Western wear business, and it'll happen in less than 10 years from now. But will it really happen? Only time will tell. But I gotta say, when I hear these boots are made for walking, yeah, I tell myself, Julie, you really cannot sing. But I gotta say, it just hits different.
That's it for today's Wall Street Breakfast. Thanks for listening. To take full advantage of Seeking Alpha with coverage on significant stocks and ETFs, become a premium subscriber. Check out seekingalpha.com slash subscriptions. I'm your host, Julie Morgan. Go out and make it a great day.