Katy Perry, the pop superstar, was seen last weekend at the Coachella music festival, in the Colorado desert (California, United States). The American singer supported her best friend, Mia Moretti, who debuted as a disc jockey. To close the famous musical event, Perry went to see rapper Doja Cat dressed in a black jumpsuit and ultra jeans. baggy (wide) that barely clung to her hips. 2000s fashion is back. This is confirmed by Vogue, Marie Claire, Glamor and even InStyle, which even called 2023 the year of baggy pants.
It is because of their infinite capacity to be recycled regardless of the pace of trends that it is said that jeans never go out of style. But one of the pioneers of this classic textile is experiencing a moment of profound transformation. Levi Strauss & Co., with more than 170 years of history, has embarked on a restructuring to strengthen its brand and retain a consumer who increasingly has more options in the window.
The company is committed to two items of clothing—pants baggy and denim skirts—which will become the flagship in a season of changes. Demand, especially led by women, has exceeded expectations and catapulted sales of jumpsuits and flared pants and low-rise pants. The world has also regained its hunger for jeans after the pandemic. The iconic 501 pants sold 11% more last year compared to 2022, according to Levi’s annual report.
Levi’s biggest innovation, however, is far from the public eye and is called Project Fuel. This aims to “increase the speed, agility and efficiency of the business,” as explained by Michelle Gass, president of the company, in an email that she sent to all employees at the end of last February.
The project also included sacrifices. These were announced by Gass at the beginning of the year, when she took over from CEO Chip Bergh and became the company’s top executive. She then adopted the “difficult, but necessary reduction in staff.” The layoffs focused on corporate positions, where she cut 12% of office workers. The cut generated an expense of 116 million dollars (109 million euros) for the company in restructuring costs.
The measure adopted was well received by Wall Street. Levi Strauss earlier this month declared first-quarter losses of $11 million. Last year, in the same period, he had a net profit of 115 million. Even so, the results exceeded market forecasts. The day after the announcement, the company’s shares soared 18%, the largest daily rise on the stock market in the last four years. “Broadly speaking, the year has started very well,” said Paul Lejuez, Citi analyst, in a note distributed to the bank’s clients.
Factory in Poland
In addition to the layoffs, the company has taken other steps to become more agile and focus on customers visiting its 500 stores around the world and online shoppers. It has closed its footwear business in Europe, its second market after the American continent, to focus on the manufacturing of clothing. It also cut ties with the plus-size brand Denizen and closed a factory in the Polish city of Plock that had been in operation since 1991, citing problems hiring skilled workers and rising manufacturing costs. production. The closure of the Polish plant affected 650 people, who were laid off.
Based in San Francisco, where it occupies a distinctive bayfront building, Levi Strauss has shown confidence in getting out of the red in the second half of the year.
At the moment, sales for the first quarter, of 1.5 billion dollars, represent a drop of 8% compared to those obtained in the same period of 2023. The figure is a product of the decline in points of sale in shopping centers and large galleries, which After the pandemic they have not completely recovered. Among these are Macy’s or Kohl’s where, by the way, Michelle Gass comes from. By geographic area, Levi’s sales remained stable in Asia, but fell in Europe (7%) and more sharply in America (11%). Harmit Singh, the company’s chief financial officer, said in a recent interview with The Wall Street Journal that they will be back on the path of “one and a half digit” growth for the second half of the year. The jeans giant assures that it will end the fiscal year with a lower inventory than in 2023, considered the year of the jeans baggy.
The executives’ optimism lies in the results of the restructuring, which has translated into more cash liquidity. These resources are being used to grow, especially outside the United States. The international market represents 56% of Levi Strauss’ total business.
Last February, the company signed an agreement with Expofaro, a Colombian family business that has 40 years of experience in the textile sector. This pact allows Levi Strauss to take over 90 points of sale spread across 40 stores in the South American country. In addition, Expofaro becomes a distributor for other regions of the continent.
Gass highlighted at the beginning of the year in his meeting with investors the success of the company’s clusters that centralize regional operations. And he cited as a success story the one the company has in Bangalore, in India, a city that has hosted its second largest store in the world since 2023, measuring 700 square meters (only behind San Francisco). Gass assures that the company is thinking about consolidating its European operations, now divided into North and South, into a single regional office that has teams focused on each country on the continent.
There are those who claim that the good moment that Levi’s is experiencing is due to Beyoncé. The popular singer and fashion icon launched Cowboy Carter at the end of March. The album has climbed the charts and includes a duet with Post Malone titled Levi’s Jeans. The company immediately capitalized on the opportunity and posted photos of its products on Instagram. From mommy jeans to the popular low-rise pants. Now all that remains is for the pop superstar’s accolade to translate into greater sales for the century-old denim clothing brand. At the moment, the shares have appreciated 20.5% so far this year, placing the company’s value on the stock market at 8.1 billion dollars.
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