In the fickle business of fashion, the popularity of denim has ebbed and flowed over the years, and likewise, the fortunes of Levi Strauss. This venerable brand invented blue jeans in 1873.
Just two years ago, Levi’s was riding high, sporting a market capitalization of $12 billion in May 2021, up from about $6 billion just two years earlier when it went public.
For over three decades before that, Levi’s had been a struggling, privately held company whose core audience was aging out.
Today, the company is worth about $5.3 billion, less than half what it was in 2021 when consumers were spending all that pandemic stimulus money to trade up and look good in Levi’s.
The stock price has fallen from a high of about $29 a share to where it is today, about $13.50.
Since 2021, the company seems to have again lost its way under CEO Chip Bergh, a former US Army captain recruited in 2011 as group president for global grooming at Procter & Gamble. After working his way up the ranks over nearly three decades, Bergh has said he left P&G when he realized he would not be a candidate for P&G’s CEO.
So, rather than the fashion maven that Levi’s needed, the company’s board picked Bergh, an ambitious corporate executive responsible for such brands as Tampax and Gillette.
The problem at Levi’s is not their distressed jeans; it’s distress in the C-suite. In the quarter ended June 30, the company posted a $1.6 million loss compared with nearly $50 million a year earlier. The company is now a consumer retail laggard.
Anyone who follows fashion industry trends as closely as I do might have predicted Levi’s recent problems. For me, it was when I noticed that Bergh showed up at virtually every industry event and conference wearing an astonishing outfit for how out of step it is with the current culture – the so-called “Canadian Tuxedo”: denim jacket and jeans. Who wears denim jackets today? I thought this was a fashion exec out of step with the fashion market. Furthermore, as inflation-wary consumers trade down to save money, Levi’s is losing to Walmart, Target, Tractor Supply, and other retailers expanding their private label lines at prices Levi’s can’t, won’t, or shouldn’t match.
In January this year, Bergh assured analysts, “The skinny jean is not going anywhere.” That was about the same time fashion journals like Elle were running headlines like “The Skinny Jean is Dead.” The problem is people who wear jeans are getting bigger. At some point, skinny jeans on bulky bodies stop looking sexy. The trend is evident these days: jeans buyers are looking for room in their pants, wider legs, and stretchy materials. Skinny jeans may be dead, but as things stand, not the future of denim.
The distress in Levi’s corporate ranks may not be over.
As part of a succession plan announced late last year, Bergh was recently to be replaced by Michelle Gass, the former chief executive of department store chain Kohl’s.
Gass takes over a company whose retail website promotes heavily discounted merchandise, and a whole section of denim jackets and other tops is a product category outside of its expertise (one exception: the trucker jacket). Last year, the company spent $400 million to buy Beyond Yoga, which focuses on activewear and body-positive apparel – think stretch pants. They have a wide array of “Western” tops, and one would argue a complete lack of product vision.
The bottom line: Levi’s has lost its fashion sense and any product vision.
The company seems to be clinging to the past, a past that belongs to a fashion cohort that is more concerned with getting in and out of their cars without having to hold their breath than looking sexy and having spoken to several friends and colleagues about what the first thing that crosses their minds when asked about Levi’s? Their response was, “The past”.
Levi’s needs a make-over. A vision. New ideas for a future, not a past.
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