What happened

Shares of Levi Strauss (LEVI -0.76%) slid 30.5% through the first six months of 2020, according to data provided by S&P Global Market Intelligence. The COVID-19 pandemic hit Levi's business particularly hard since it generated only 5% of its total revenue last year through e-commerce channels. 

Levi Strauss was not one of Wall Street's favorite retail stocks heading into 2020. Its share price fell 14% in 2019 following Levi's initial public offering in March. Investors were discouraged by a lack of revenue growth, which can be blamed on wholesale weakness. The COVID-19 pandemic made things worse as Levi's joined most non-essential retailers in closing its stores during its second quarter. 

Two women holding shopping bags and wearing jeans.

Image source: Getty Images.

So what

Levi's has faced problems in the Americas region because the U.S. wholesale market has been soft. That has overshadowed its growth in other sales channels, such as company-operated stores and online sales, which together provided roughly a third of revenue at the start of 2020. 

On April 7, Levi's reported total revenue growth of 5% for its fiscal first quarter, which ran through Feb. 23. Direct-to-consumer revenue, including online sales, grew by 13% on a constant-currency basis. Non-GAAP earnings per share improved by $0.02 to $0.40, which included some minor early headwinds from COVID-19 and unfavorable foreign currency exchange rate shifts. 

Now what

In mid-March, Levi's temporarily closed all of its stores in the Americas and Europe. This will cause performance for the fiscal second quarter to be much worse. Management is focused on what they can control in the short term, such as reducing costs and capital spending. But the bleeding should be over. On May 13, Levi's announced it was beginning the process of reopening its stores. 

Levi's reports its fiscal second-quarter earnings on Tuesday, giving. investors their first clear picture of how Levi's e-commerce business has performed in the pandemic;  many retailers have reported a significant boost in online demand during COVID-19. Levi's just launched its new mobile app late last year, and management reported a strong customer response during the fiscal first-quarter conference call.