Levi Strauss & Co.: Corporate profile SAMPLE PAGES
All content copyright © 2003 Aroq Limited
Levi Strauss & Co.: Corporate profile
Author: Stacy Baker Published August 2003
No part of this publication may be copied, reproduced, stored in a retrieval system, or be transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publishers. All material published within this report is copyright Aroq Limited. This report is provided for individual use only. If you would like to share this report with your colleagues, purchase additional copies or sign up for a company wide licence please contact Will Johnston: Tel: +44 (0)1527 573 608. Fax: +44 (0)1527 577 423. Email:
[email protected] Aroq Limited Registered in England no: 4307068 Seneca House, Buntsford Hill Business Park, Bromsgrove, Worcs, B60 3DX, UK. Tel: +44 (0)1527 573 600 Fax: +44 (0)1527 577 423 Web: www.aroq.com © 2003 All content copyright Aroq Limited. All rights reserved.
Levi Strauss & Co.: Corporate profile
All content copyright © 2003 Aroq Limited
Table of Contents
Table of Contents ................................................................................................................................................................... i Overview................................................................................................................................................................................. 1 Strengths................................................................................................................................................................................ 3 Levi proves as tough as denim................................................................................................................................................ 6 Reconnecting with consumers ............................................................................................................................................ 9 Retail distribution ................................................................................................................................................................ 11 Regaining executional excellence ..................................................................................................................................... 13 Principal sources................................................................................................................................................................. 15
Levi Strauss & Co.: Corporate profile
i
All content copyright © 2003 Aroq Limited
Overview
Overview Founded in 1853 by Bavarian immigrant Levi Strauss, Levi Strauss & Co (LS&Co) is one of the world's largest brand-name apparel marketers with sales in more than 100 countries and distribution from more than 500 contractors worldwide. The company designs, manufactures and markets apparel for men, women and children, including jeans and jeans-related pants, casual and dress slacks, shirts, jackets, skirts and related accessories. Headquartered in San Francisco, California, LS&Co employs approximately 13,000 people in more than 40 countries and owns and operates 21 production and finishing facilities, 20 distribution or customer service centres, and numerous sales and marketing offices. Today, the Levi's trademark is one of the most recognised in the world and is registered in more than 160 countries. Despite its glowing heritage, the company’s financial performance is less than stellar, a slide that began in 1996. Levi’s execs attribute the downturn to being inattentive to consumer needs, relying on its heritage, inefficient logistics, domestic production, poor relationships with retailers and a decline in department store business – Levi’s primary channel. Levi’s has been battling to reverse its situation with a major 5-year business turnaround, “The Great Levi Strauss & Co Turnaround.” The turnaround is based on three parts: gaining control of the business, steadying sales and realising profitable growth and is aimed at stabilising revenues and expanding the business within the next few years. To make this happen, the company brought in Philip Marineau in 1999. Since his hire, he’s instituted a number of major changes designed to improve relationships with retailers and increase margins, such as updating inventory systems, closing domestic factories in favour of overseas sourcing, revamping its executive force and cutting costs. Levi’s sales this fiscal year will rise 2 to 5 per cent above last year’s $4.14 billion, speculate Levi’s executives, down from $7.1 billion in 1996 when its revenues peaked, according to experts. Despite ending the last two quarters of fiscal 2002 with strong sales, the company ended the year with its sixth straight annual sales decline and a steep slide in profits (down 83 per cent to $25 million), say reports.
Levi Strauss & Co.: Corporate profile
1
All content copyright © 2003 Aroq Limited
Reconnecting with consumers
Reconnecting with consumers Key to reconnecting with consumers is that Levi’s stops focusing entirely on its heritage and takes a multi-pronged approach to growing multiple brands globally, according to experts. Its strategy must leverage brand equity and generate “news” through relevant and innovative product offerings. In 2000 the company segmented the marketplace better and designed and delivered relevant products and marketing programs to a broader range of consumers, which should propel the company in the right direction. The result has been recent launches like Dockers stain-resistant extensions in chains, Type 1 and super-low-rise men’s jeans, Levi’s Vintage Clothing and Levi’s Red Tab in specialty stores, Levi’s Premium and Special Edition at highend department stores and trendy chains, and the Signature label through discounters. Marineau has stated that spring 2003 marks the first time the company will offer a women’s jeans line that is equal to or better than the men’s line. “New fits and innovative finishes in the Levi’s brand have improved our brand relevance scores with consumers and helped us gain market share this year in the US men’s jeans market,” says Beckman. He also cites innovations from the Dockers brand in recent years like the Mobile Pants in 2001, Go! Khaki with Stain Defender in 2002, and new Individual Fit Waistband technology in 2003. “These products have led innovation in the category and after several years without any significant news in the khakis arena, given men a compelling reason to get off the couch and go buy a new pair of pants. These products have all performed extremely well in the market.” Analysts, however, have yet to see the sales gains from innovation and are taking a wait-and-see attitude towards the Signature launch to see if Levi’s is truly reconnecting with consumers.
Levi Strauss & Co.: Corporate profile
9
All content copyright © 2003 Aroq Limited
Retail distribution
Retail distribution LS&Co maintains collaborative relationships with retailers worldwide. It distributes its products through a number of selected retail channels, including department stores, chain stores, specialty stores, dedicated franchised stores, outlets, Internet sites and mail-order catalogues. Approximately 3,000 retail customers, operating in more than 16,800 locations, sell LS&Co apparel in the United States and Canada. European retail customers include large department stores and independent retailers that operate either a single or small group of jeans-focused stores or general clothing stores. In Asia Pacific, more than half of that region’s sales are generated through the specialty store channel, which includes multi-brand and franchised Original Levi’s Store retail shops. Worldwide, there are approximately 750 franchised or other independently owned stores selling LS&Co apparel under the “Original Levi’s Store,” “Levi’s Store” and “Dockers Store” names. These dedicated-format stores are important vehicles for demonstrating the breadth of product lines, enhancing brand image and generating sales. To get retailers on board with Levi’s, the company is offering more competitive margins and volume incentives, as well as upgrading presentation at retail. One analyst believes this strategy could prove to be very successful – in essence Levi’s is making it more profitable to sell its line than any other brand. The company has also revitalised its relationships through collaborative account planning, with each side better managing the mutual business. By building account-specific, annual and long-term tactical plans with its retail customers, LS&Co is ensuring that the right products are available at the right time for consumers. While Levi’s has improved delivery times in the past two years, Marineau is committed to making more incremental improvements in 2003 to increase timeliness and accuracy, according to Beckman. There have been glitches, though. February traffic and retail sales, for example, were lower than expected and forced inventories even lower, which caused Levi’s to lose a substantial amount of core replenishment orders, Marineau said in a report.
Levi Strauss & Co.: Corporate profile
11
All content copyright © 2003 Aroq Limited
Principal sources
Principal sources APS Financial Research Reports - Levi’s, 10.15.02 Australian Financial Review, 4.30.03; Levi’s Blue as it Slides into Red Business Wire, 3.25.03; LS&Co Announces First Quarter 2003 Financial Results Business Wire: www.businesswire.com DNR, 11.04.02: Levi’s Move to Mass: Will It Revitalize or Cannabalize? DNR, 5.12.03; “Levi’s Launches Dockers Sub-Brand” Fair Disclosure Wire, 3.25.03; Levi Strauss Conference Call Hoovers (www.hoovers.com) Jeff Beckman, title TK, original interviews, 6.03 Levi Strauss & Co FY 2000 Annual Report, 2001 Annual Report, 2002 Annual Report Levi Strauss website: www.levistrauss.com Levi Strauss & Co 10Q, U.S. Securities and Exchange Commission Los Angeles Times, 1.14.03; Levi is Slowly Turning the Corner on Revenue Los Angeles Times, 6.27.03 NPD World News, 5.23.03 Piper Jaffray’s Daily Market Report, 6.26.03 Pivotal Magazine, Supply and Demand
Levi Strauss & Co.: Corporate profile
15
All content copyright © 2003 Aroq Limited
Principal sources
Reuters news articles: •
Levi Sales and Income Dip, Michael Kahn, June 20, 2001
•
Weak Markets Hurt Levi Strauss Earnings
•
Levi Earnings Down on Weak Retail Markets
San Francisco Business Times (www.sanfrancisco.bcentral.com/sanfrancisco) The Nikkei Weekly, 2.24.03; Levi’s Back in the Saddle with New Strategy The San Francisco Chronicle, 3.26.03; Levi Posts Loss in Quarter The San Francisco Chronicle, 4.30.03; Ride Lode, Heavy Load The San Francisco Chronicle, 1.14.03; Wind in Its Sales The San Francisco Examiner, 10.31.02 WWD, 11.07.02; Levi’s: Growth in 2003 WWD, 1.14.03; Make it a Double: Second Straight Rise in Levi Sales WWD, 5.01.03; Evolution of an Icon
Levi Strauss & Co.: Corporate profile
16
