[ad_1]
Levi Strauss & Co (Levi) launched the first public call for savings this year, and it was a great success. But now comes probably the most difficult part: follow.
The 166-year-old denim brand saw its shares climb an additional 2% on Friday, in addition to the 32% jump in the stock on Thursday, its first trading day in 34 years. That's worth $ 8 billion, more than Macy's or Nordstrom. Investors were clearly impressed by the fact that Levi's, emblematic of its 501 jeans, has recovered since 2011, when the former CEO of Procter & Gamble (pg), Chip Bergh, took the reins.
Since then, he has focused his activity on his flagship product, jeans, improving their quality. In addition to that, he has expanded the brand's line of women's clothing and tops; think t-shirts and hoodies. Meanwhile, he halved Levi's once large debt, reduced his reliance on US department stores, and updated Levi's store fleet.
Yet, as expected, some investors quickly rushed to Levi's parade. Reuters indicates that a number of fund managers are skeptical about the prospects of a well-known and well-established brand, such as Levi, is growing enough to justify the share price. Apparently, a 14% increase in revenue in 2018 did not convince them.
Bergh acknowledges, however, that Levi's still has a lot of work to do to reach its potential. Sales grew rapidly last year, but still reached $ 5.8 billion, a level below the peak of $ 7.1 billion two decades ago. And they remain well below the $ 10 billion mark that Bergh has been longing for. It is an ambitious goal; By comparison, Old Navy, a fast growing company of Gap Inc. (gps), is currently an $ 8 billion brand.
"My dream is ten billion dollars, but 7.1 million dollars [billion] is the next stage of the train, "he said, said Bergh Fortune in an interview on the NYSE Thursday.
Levi's bakery business has long been one of men's jeans. But society is making great strides in jeans and other women's clothing. Revenues in this category jumped 29% last year and now account for almost a third of the company's revenue, compared to a fifth when Bergh was founded. A few years ago, Bergh had an epiphany on a plane, frustrated by the number of women boarding in yoga pants rather than denim. "We lost our consumer and did not listen to what they tell us," he recalls.
Thus, Levi's worked with its factories to add softer and more extensible material. In 2015, she relaunched her women's business, which has now experienced 14 months of consecutive growth. Still, Levi's is the third brand of women's jeans in the US and Bergh says the category is one that we can own. -Cola and Ford among the iconic American logos.
According to Bergh, Levi's will continue to expand its accessories business, which now generates 6% of revenue, with more items such as backpacks, socks and underwear; one day, this could even extend to shoes.
For department stores, particularly those in the United States, Levi's has reduced its exposure to them. By 2018, approximately 300 US department stores selling Levi products have closed. At present, 30% of Levi's revenues come from its own company-managed stores and website. Bergh estimates that this figure could reach 50% as his store footprint and digital business grow.
That's not to say that Levi's is giving up department stores: Bergh quickly pointed out that chains such as HBC's Lord & Taylor (hbc) and Macy's Bloomingdale's Inc (m) were giving more money. Brand space for items at $ 100 or more, a This approach, he says, will elevate brand perception at all levels, which means it will also help sell cheaper products.
Levi's international activities are another major badet for Berkeley: Bergh is considering many other opportunities abroad, particularly in markets such as China. He is betting on Levi's all-American stamp to reinforce the brand's $ 10 billion watermark.
"I'm staying around," Bergh said, "my job is not over."
Source link
