Sales of denim dresses and skirts surge due to Western clothing trend, Levi Strauss reports.

• According to Levi Strauss, the demand for denim clothing such as skirts and dresses is increasing due to interest in Western fashion.
• The popularity of Western wear has attracted the attention of consumers, retailers, and Wall Street, leading to a surge in demand.

In her latest album's lyrics, Beyoncé repeats the phrase "denim on denim, on denim, on denim."

shoppers are taking that advice to heart. Levi Strauss executives are ecstatic.

The demand for Western wear is increasing as consumers prefer complete denim outfits, said Levi's, a 171-year-old clothing brand, on Wednesday. As the style gains cultural acceptance, it is driving growth in denim categories such as shirts, skirts, and dresses that are not part of Levi's well-known blue jean line.

Western wear is currently very popular, as CEO Michelle Gass stated during an analyst meeting on Wednesday night following the release of the latest quarterly earnings report for the retailer based in California.

A Western-style revival has been gaining popularity recently, prompting fashion-conscious consumers to seek out items such as jeans, boots, and cowboy hats. Levi's experienced significant success when its denim line was mentioned in Beyoncé's song "Levii's Jeans," which was released this year.

The popularity of Western style has been linked to Beyoncé's "Cowboy Carter" album, a fashion line launched earlier this year, and Taylor Swift's Eras Tour.

Levi Strauss CEO Gass has stated that denim is currently experiencing a resurgence in popular culture, with Western-style clothing gaining widespread appeal.

Levi Strauss is capitalizing on the demand for denim beyond its iconic "501" jeans, as evidenced by the company's earnings call on Wednesday. Sales of denim skirts, jumpsuits, and dresses all increased by at least 100% in the latest quarter, according to Gass. Additionally, western shirts sales, particularly among women, have also seen a significant increase.

The 55-year-old chief executive described a new strategy of dressing customers in denim from head-to-toe, and Levi has found success in it.

Gass stated on "Mad Money" that our new focus is to continue owning jeans but to take the denim top to bottom. She noted that the denim skirt and dress categories haven't been historically large for the company, but now they're exploding.

Denim rage sets a high bar on Wall Street

Levi Strauss experienced a 15% decline on Thursday, its second worst day since going public in early 2019, despite the well-documented denim craze.

Despite the denim boom, Levi Strauss slightly missed the $1.45 billion revenue consensus forecast in the fiscal second quarter, with the sales miss attributed to unfavorable foreign exchange rates and weakness in the Dockers brand.

While Levi Strauss earned 16 cents per share, excluding items, ahead of the 11-cent average estimate by analysts, the company's revenue growth was below expectations.

The stock of the cotton-based fabric company has increased by more than 18% year-to-date, despite a drop on Thursday. In comparison, the parent company of denim brands Wrangler and Lee has only risen 5% year-to-date.

Ike Boruchow, a Wells Fargo analyst, stated that Levi's second-quarter release did not meet expectations, as it was not good enough for "one of the most crowded longs in the space today." In other words, the company failed to meet an admittedly high bar.

Citigroup analyst Paul Lejuez considered Levi's most recent quarter satisfactory, but expressed worry about the wholesale business's performance and the possibility of European sales declining in the second half of the year.

Lejuez cited several factors as reasons for optimism on the stock, including new styles and fits, which are typical for a clothing manufacturer.

Lejuez's final one was more unique: Beyoncé.

— CNBC's Gabrielle Fonrouge and Julie Coleman contributed to this report