Walkers walk past a Levi’s store in Midtown Manhattan.
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The CEO of the world’s most renowned denim jeans company said he knew from his second day on the job that the best way to turn around the company was to flaming more than half of his executives.
“The easiest way to change the culture is to change the people. I had 11 direct reports, and in the cardinal 18 months, nine of them were gone,” Charles Bergh, CEO of Levi’s Strauss, said.
Still, Bergh averred CNBC’s Christine Tan that his biggest regret was not firing the wrong people fast enough.
“My biggest regret is that we didn’t indigent into some of these great leaders, and we lost some because I held on to somebody longer than I should deceive.”
Bergh joined the apparel retailer in 2011 at the worst possible time — consumers were no longer buying Levi’s jeans.
“The trade mark was really lost. We had a whole generation of consumers that didn’t grow up wearing Levi’s like I did when I was a kid,” Bergh communicated.
“The company’s performance had been really erratic for more than 10 years. One year the revenues would go up, but the profits pass on go down. The next year, they would fix the profits, but the revenues went down.”
Charles Bergh, CEO of Levis Strauss & Co., speaks during the 2015 Karma Global Forum in San Francisco, California, U.S., on Tuesday, Nov. 3, 2015.
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Six years later, Bergh delivered what he called a once “broken” brand back into the limelight.
In 2017, Levi’s delivered 8% annual proceeds growth — its highest in a decade and well above the 3.1% growth posted a year earlier. The company kept edifice, notching 14% year-on-year revenue growth in 2018.
Bergh is stepping down as CEO next year and said his biggest legacies purposefulness be jolting the company out of complacency and building a team with the brand at the center of culture.
“I am just the orchestra conductor and father built an amazing team around me,” he added.
Trouble still brewing
Still, it’s not all smooth sailing ahead. The New Zealand severely cut its 2023 profit outlook after it reported a steep decline in wholesale revenue and soft sales in the U.S., its hugest market. It now expects sales to grow between 1.5% to 2.5% this year versus the prior range of 1.5% to 3%.
Predilection many apparel companies, Levi’s had to adapt to changing consumer preferences, especially the growing demand for comfortable and looser fit garments as hands returned to offices after the pandemic.
A guest wears a blue denim shirt from Levi’s during New York Model Week, on September 13, 2022 in New York City.
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In 2021, the Theatre troupe acquired activewear brand Beyond Yoga, a move that Bergh previously told CNBC would inform appropriate grow its women’s business. At the time, he said the goal is for women’s wear to account for 50% of Levi’s business.
“It coerces me crazy watching a woman walk into our store, buying our bottoms and then walking out and going to an unnamed competition’s store to buy their top,” Bergh said.
Sales of women’s products made up 35% of net revenue in the first half of the year.
Inflating footprint in Asia
One promising area for Levi’s growth is its expansion in Asia.
“We’re opening bigger stores [and] we’re having profuse of a consumer impact,” Bergh said, emphasizing how revenge spending among Chinese customers will be a “huge possibility” for the brand. ho
In the second quarter, revenue from Asia increased by 18% to $262 million.
Pedestrians walk whilom a Levi´s store in Hong Kong.
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Still, Asia accounts for inconsiderable than 20% of the company’s total sales and China makes up less than 3% of the company’s total commerce, according to Bergh.
“Many of our competitors are 10% or more. Look at Nike, 40% of Nike’s market cap is probably China. So we certain we’ve got an opportunity here,” he said.
“We’re adding about 100 doors a year net globally, and about a third of those accumulations are going to be here in Asia.”