Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Thank you, Harry, thank you Hulu, thank you FX, thank you,
Speaker 2: Love Story, and more. We want to talk about Levi
Speaker 2: Straussen Guvey Company's latest results really knocking the socks off investors.
Speaker 2: The stock is up the most in one year, as
Speaker 2: the company raised its projections for the year after reporting
Speaker 2: better than expected quarterly results. They cited strong demand in
Speaker 2: all regions as the dead and brand steershoppers to its
Speaker 2: own stores and website. We're going to talk about that
Speaker 2: a lot. Company reporting revenues of one point seven billion
Speaker 2: in the fiscal quarter that exceeded the average of analyst estimates.
Speaker 2: Earnings per share also excluding some items surpassing expectations. The
Speaker 2: stock now up about seven percent year to date and
Speaker 2: has gained nearly eighty percent in the past twelve months. YEP,
Speaker 2: for those watching right now, it is up more than
Speaker 2: eleven percent. Tim in today's session.
Speaker 1: With us is the president and CEO of Levi Strauss
Speaker 1: and Co. She's also a member of the company's board.
Speaker 1: She's former CEO of Cole. She spent close to seventeen
Speaker 1: years too at Starbucks. We've got Michelle Goss here in
Speaker 1: the Judio. Welcome. It's good to see you. The stock soaring,
Speaker 1: investors are liking what they see. Where did the momentum
Speaker 1: come from, and what's really working right now?
Speaker 3: Yeah, well, first thanks thanks for having me, and I'm
Speaker 3: really excited to talk about how we started the year.
Speaker 3: You know, we are seeing momentum across the board, which
Speaker 3: is around our strategies really picking up and accelerating. So
Speaker 3: we delivered nine percent organic growth fourteen percent on a
Speaker 3: reported basis. We are seeing this across geographies. We're seeing
Speaker 3: this across categories. We're seeing across genders. Why are seeing
Speaker 3: across channel?
Speaker 2: Why is this happening?
Speaker 4: Well, you know it's the brand.
Speaker 3: Yeah, it's the product, and it's the execution and all
Speaker 3: of those things are working. And I got to tell
Speaker 3: you the team is doing a phenomenal job. We're coming
Speaker 3: off of a solid year last year and it's accelerating
Speaker 3: right into twenty twenty six.
Speaker 2: Michtill Dennan, though, is such a crowded category, Like I
Speaker 2: won't go to certain department stores or because it's just
Speaker 2: too much for me, but I do.
Speaker 4: Go to Levi's and I thank you for that.
Speaker 2: You're welcome, You're welcome. And I to you coming in
Speaker 2: my twenty three year old. She's wearing them. That's where
Speaker 2: she wants to go. You talked about your wife like
Speaker 2: you are hitting a lot of different demographics. How do
Speaker 2: you do that? How do you appeal to so many?
Speaker 4: Yeah?
Speaker 3: Well, I would say it does start with the brand,
Speaker 3: and we like to say that Levi's operates at the
Speaker 3: center of culture and we're hitting a new stride with
Speaker 3: the brand. I mean, the brand has been strong for
Speaker 3: a long time. Last year it went up a notch.
Speaker 3: We had this fantastic partnership with Beyonce that moved into
Speaker 3: a partnership with Shabouzi.
Speaker 4: And this year we.
Speaker 3: Launched our brand campaign at the Super Bowl and it
Speaker 3: was the perfect time because Levi's stadium was hosting the
Speaker 3: Super Bowl and we hadn't been on the Super Bowl
Speaker 3: in over twenty years. But it wasn't about launching an
Speaker 3: ad for the Super Bowl. It was about launching our
Speaker 3: campaign and we call it Behind Every Original, which is
Speaker 3: a global campaign and leans into what Levi's does best
Speaker 3: across sports, across fashion and music, and so if you've
Speaker 3: seen the ad really does bring that to life and
Speaker 3: has artists like Doshi or SGA style great and Rosie.
Speaker 4: And I like to talk about Rosie because here is this.
Speaker 3: She was part of Black Pink ninety million followers and
Speaker 3: growing and we're rolling that right into a collaboration with
Speaker 3: her in Asia. So that is taking off as we speak.
Speaker 3: And so this is about launching, like I said, a
Speaker 3: campaign for the year looking ahead.
Speaker 4: We've got World.
Speaker 3: Cup coming up that the stadium is Levi Stadium is hosting.
Speaker 3: We have collaborations. You know, we had our collaboration with
Speaker 3: Nike and Jordan a couple months ago. We had people
Speaker 3: lining out the doors to get the special clab.
Speaker 1: Michelle. When you talk about these partnerships with celebrities, with
Speaker 1: the artists, I know each one of them is different,
Speaker 1: but in general, are they coming to you or are
Speaker 1: you identifying them and you're going to them? How organic
Speaker 1: is it?
Speaker 4: It's it's it's all of the above. Well so, and
Speaker 4: it happens organically.
Speaker 3: I mean literally, what just at the Brits we had
Speaker 3: Harry's Styles, Dan all wearing five O ones. I mean,
Speaker 3: this is about being at the center of culture and
Speaker 3: the Beyonce partnership that started because she wrote a song
Speaker 3: called Levi's Jeans but we've been friends with Beyonce for decades,
Speaker 3: back back to the nineties, or Carolyn Bassett. We're the
Speaker 3: five seventeen's and you know in Love Story it's heavily
Speaker 3: featured and sales are up like twenty five percent.
Speaker 2: Did that surprise you, like? And when did you first
Speaker 2: all of a sudden notice, Like we've talked about this on.
Speaker 4: Air, the ad pack of this. Yeah, well, the nineties.
Speaker 3: We've known about the nineties trend for a long time,
Speaker 3: and in fact, when you go into our stores online,
Speaker 3: go into our wholesale partners, I mean that nineties trend
Speaker 3: is all Levi's is all over it, from top to bottom.
Speaker 3: I mean one of the things we talk about when
Speaker 3: you ask about what's working, we talk about our two
Speaker 3: key strategies, which is about becoming a more DTC forward
Speaker 3: company and also evolving the brand from being about jeans
Speaker 3: to head to toe. We say denim lifestyle. What does
Speaker 3: that mean. It means that we want to give you
Speaker 3: the whole wardrobe. It starts with the genes, but tops,
Speaker 3: button downs, jackets, outwear dresses all through the lens of Levi's.
Speaker 4: But we're playing now in the total apparel space.
Speaker 2: Michelle.
Speaker 1: Perhaps that's a good segue to talk about the macroeconomic
Speaker 1: environment and potential disruptions or disruptions you've seen from higher
Speaker 1: transportation costs as a result of bringing these products from
Speaker 1: overseas into the US and indeed around the world. What
Speaker 1: has this macroeconomic backdrop over the last five six weeks
Speaker 1: done for your business?
Speaker 3: Yeah, well, over the last year, I think it's been
Speaker 3: a really uncertain time. You know, I take a step back.
Speaker 3: You think about the company LS and Co. We've been
Speaker 3: around for one hundred and seventy years. We've weathered lots
Speaker 3: of storms and navigated, and it goes back to who
Speaker 3: we are as a brand. During times like this, people
Speaker 3: do we have to deliver, we have to execute, but
Speaker 3: they really do go to brands that they trust, that
Speaker 3: they love. We offer quality, we offer a great value,
Speaker 3: We offer durability.
Speaker 4: To date, our.
Speaker 3: Consumer has proven resilient. I mean you see that in
Speaker 3: our numbers. You know, we are bringing them a lot
Speaker 3: of innovation. I think, you know, if pressures come on
Speaker 3: the can sooner, when when the wallets get tighter, you
Speaker 3: know we have to up our game, right, wallets get tighter,
Speaker 3: we have to work harder and that's what we're doing.
Speaker 3: We offer great Red Tab right down the middle. We
Speaker 3: offer Signature by Levi Strauss, which is an awesome value.
Speaker 3: That business was up sixteen percent. It's in the twenty
Speaker 3: twenty five dollars range. And then we offer Blue Tab
Speaker 3: premium Japanese denim. And you know, you can buy a
Speaker 3: pair of Jings from Leo's now at like two hundred dollars.
Speaker 3: So we're serving every customer need. But know that we
Speaker 3: are constantly just making sure that we can address the
Speaker 3: needs of the consumer in the moment, whatever that moment
Speaker 3: might be.
Speaker 2: Love talking fashion, love talking to the collaborations. I also, though,
Speaker 2: do love the nitty gritty of like supply chains and
Speaker 2: what's a company like you that has been around for
Speaker 2: so long and seen a lot of different market cycles.
Speaker 2: What is your supply chain and have you kind of
Speaker 2: spread it around based on what we've seen not just
Speaker 2: in the last year, but even coming off the pandemic,
Speaker 2: that reminded us that supply chains can be impacted dramatically
Speaker 2: when they're focused in one area.
Speaker 4: Yeah, that's right.
Speaker 3: We have a robust, very diversified supply chain across many
Speaker 3: many countries. We have a really strong team that is
Speaker 3: agile and responsive and so and these these relationships with
Speaker 3: our suppliers go back decades and decades.
Speaker 4: So we have tremendous partnerships.
Speaker 3: And as we've navigated things like tariffs, everybody has stepped
Speaker 3: up to help us, you know, determine what the next
Speaker 3: steps are there, you know, just to put it out
Speaker 3: there on tariffs. I mean, everything that we've got to
Speaker 3: the street includes tariff assumptions on call it the original
Speaker 3: reciprocal tariffs at a higher rate, at that twenty percent
Speaker 3: incremental rate. You know, there's been recent news of it
Speaker 3: going down back to ten percent. We haven't baked that
Speaker 3: into our numbers yet. One could say that is upside
Speaker 3: there could mean up to thirty five million dollars in
Speaker 3: ebit or seven cents of EPs, but we've held back
Speaker 3: just knowing that there still is uncertainty out there.
Speaker 4: As you were saying.
Speaker 1: One question we asked up going cfo Hermeat saying in
Speaker 1: the last year and the wake of tariffs has been
Speaker 1: about moving production to the United States. Dates he said,
Speaker 1: no way, that's not happening. Are you sticking by that?
Speaker 4: We are sticking by that.
Speaker 3: Yeah, that is an industry that really has shifted overseas.
Speaker 3: And like I said, because we have these enduring, long
Speaker 3: lasting relationships, I know we'll be able to navigate whatever's
Speaker 3: ahead on that front.
Speaker 2: All right, So you know a company like you, guys,
Speaker 2: our whole Bloomberg team is like, ask Michelle, this says,
Speaker 2: but we're curious about your prospects for reaching ten billion
Speaker 2: in revenue five years, seven years. How are you guys
Speaker 2: thinking about it?
Speaker 4: We have not put a number out there, but you're
Speaker 4: a date out there.
Speaker 2: Meanton, like, do you think you can get this momentum?
Speaker 2: And how far can you carry it out? Do you
Speaker 2: feel comfortable?
Speaker 3: Yeah?
Speaker 4: What I can say, and we have.
Speaker 3: I think it's important to have bold goals, right, So
Speaker 3: we've put the ten billion, we've put the fifteen percent EBIT.
Speaker 3: I think if you look at the progress over the
Speaker 3: last couple of years, take revenue. We came off of
Speaker 3: seven percent growth last year, that was up from the
Speaker 3: prior year. This year we're again guiding mid single digits.
Speaker 3: We just had a blowout quarter at up nine percent.
Speaker 3: So I think it's safe to say that you can
Speaker 3: count on consistent sustainable growth and then on EBIT. On profitability.
Speaker 3: We're making that march to fifteen percent again. A few
Speaker 3: years ago we were nine ten percent. Last year about
Speaker 3: eleven and a half. We've put them. We just said
Speaker 3: we're taking our guide up yesterday to twelve percent. So
Speaker 3: you see that sequential progress and you know, keep doing that.
Speaker 4: We'll let you guys do the math. Were but we're content.
Speaker 3: I mean, like I said, the exciting thing we are
Speaker 3: if you have visibilit the strategies are working.
Speaker 4: We've made some choices the last couple of years.
Speaker 3: We've you know, we sold the Doctor's brand so that
Speaker 3: we could really focus on the Levi's brand.
Speaker 4: And there's so much opportunity.
Speaker 1: So certainly fashion is working in your favor right now.
Speaker 1: But we know the industry is fickle and consumers are fickle.
Speaker 1: What happens or what do you do rather to make
Speaker 1: sure that when the trends do change, you move with them.
Speaker 4: Yeah.
Speaker 3: Well, as the category leader in denim, let's art there,
Speaker 3: it's our responsibility to fuel the trends. You know, the
Speaker 3: detam category is growing, it's accelerating, right.
Speaker 2: We have more denim in my no serious, my wardrobe
Speaker 2: that I have in a long long time, and I
Speaker 2: keep buying.
Speaker 3: But I would say, though this, but this evolution to
Speaker 3: denim lifestyle or I'll say lifestyle head to toe, that's
Speaker 3: not all denim, right, It is fine if you're buying
Speaker 3: a ribcage, wide leg pair of jeens, what's the perfect
Speaker 3: top that goes with it?
Speaker 4: Which is going to be different than a low rise.
Speaker 3: And so now that we're playing in this broader space,
Speaker 3: which basically increases our addressable market by fifteen x, we're
Speaker 3: playing in a one trillion market in apparel that requires
Speaker 3: focus and discipline. But we really up leveled our capabilities
Speaker 3: to do that. And you know, if you just take
Speaker 3: this last quarter, our top's business was up thirteen percent,
Speaker 3: it's only twenty percent of our business.
Speaker 4: So when you think about all that.
Speaker 3: Upside, so we now and forty percent of our business
Speaker 3: is non denim, so it's not just denim anymore for Levi's.
Speaker 4: So what is the.
Speaker 2: Biggest opportunity or categories that are not yet tapped that
Speaker 2: could be big for you guys?
Speaker 4: Yeah, I would say a couple of things.
Speaker 3: First, when we think about gender, women's is not quite
Speaker 3: forty percent of our business. Last I checked, women's has
Speaker 3: a big play in the apparel market.
Speaker 2: Clause it's a lot bigger than my.
Speaker 4: Just saying.
Speaker 3: But so there's still that should be at least half
Speaker 3: our business. So we're expecting tremendous growth there. I was
Speaker 3: just talking about head to toe. We always will be
Speaker 3: the leader in bottoms and den and bottoms, but tops.
Speaker 3: So in our business we sell two bottoms to every top,
Speaker 3: which by the way, that used to be like five
Speaker 3: five bottoms to every top. That should be the other
Speaker 3: way around, minimally one to one. That is all white
Speaker 3: space for us. And then we have amazing growth ahead
Speaker 3: of us in expansion. You know, there's still room to
Speaker 3: grow in the US, but you think about these international markets.
Speaker 3: In some cases we're just getting started there. So as
Speaker 3: we look ahead and say, how are we going to
Speaker 3: go from six points something to ten billion, we can
Speaker 3: chart that out and we feel very confident.
Speaker 2: Thank you, thank you, please come back soon.
Speaker 4: We would like you well. Thanks for having me.
Speaker 2: Yeah, we loved it, President CEO of Levi Strauss and Company.
Speaker 2: Of course, she is Miche joining us here in the
Speaker 2: studio