Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We're focusing on shares of Levi Strauss lower today in
Speaker 2: a big way after the DNA maker narrowed its full
Speaker 2: year revenue outlook. The company also revealing that it's exploring
Speaker 2: a sale of its Dockers brand joining us now, I
Speaker 2: am thrilled to say we have Michelle Goss. She is
Speaker 2: Levi Strauss president and CEO. And I think a lot
Speaker 2: of people were surprised by these results because fashion is fickle,
Speaker 2: but Denham is back in a big way right now.
Speaker 2: Of course, over leggings, you have this collaboration with Beyonce.
Speaker 2: The song came out as well, and yet of course
Speaker 2: you narrowed that revenue forecast. So how can you re
Speaker 2: ensure reassure investors that of course Levi Strauss is on
Speaker 2: that positive growth trajectory.
Speaker 3: Yes, well, it's great to be here and thanks for
Speaker 3: the question.
Speaker 1: You know, what I would say is, first off, you know,
Speaker 1: we're really confident in our long term strategies for the business,
Speaker 1: and ultimately we see the business growing to about ten
Speaker 1: billion in sales over time.
Speaker 3: And our strategies are working.
Speaker 1: I'm sure we'll talk about that, but let me have
Speaker 1: a little context for the quarter. You know, despite coming
Speaker 1: in at the low end of our guide, you know
Speaker 1: underneath that there's a lot of strength in the business.
Speaker 1: I mean, clearly we bet we beat our profit targets.
Speaker 1: Our earnings were strong, and as it relates to revenue,
Speaker 1: you know, overall we were up three percent on an
Speaker 1: adjusted basis.
Speaker 3: For Levi's brand was up five percent.
Speaker 1: Yet we did have a couple areas that underperformed, namely
Speaker 1: our China business Mexico and also on Dockers.
Speaker 3: You know, in terms of.
Speaker 1: China, I would say that we have our own executional
Speaker 1: opportunities there. It's a big market. We see the long
Speaker 1: term potential. We've changed out some leadership, and clearly issues
Speaker 1: have been exacerbated by the macro headwinds in Mexico. We
Speaker 1: can isolate that issue to our wholesale business there where
Speaker 1: one of our top customers had a cybersecurity breach which.
Speaker 3: Impacted our ability to ship.
Speaker 1: You know, we expect sequential improvement there as well. And
Speaker 1: then lastly with Dockers, I mean that's a brand that
Speaker 1: for us, it's underperformed for some time.
Speaker 3: You know, we do.
Speaker 1: Believe that both Levi's and Dockers will ultimately benefit by
Speaker 1: being independent businesses.
Speaker 3: And for us, this.
Speaker 1: Is about focus and us focus and amplifying on the
Speaker 1: Levi's brand and also beyond Yoga, which we just acquired
Speaker 1: a couple of years ago.
Speaker 2: Well, I'm glad that you brought up Dockers because that's
Speaker 2: exactly where I want to go. Of course, you said
Speaker 2: that you're reviewing options for Dockers that could include a sale.
Speaker 2: You have the likes of Bloomberg Intelligence coming out and
Speaker 2: saying that if you did sell Dockers it could free
Speaker 2: up resources to accelerate your direct to consumer expansion. But
Speaker 2: what options do you have if a sale doesn't happen.
Speaker 3: What else are you looking at for Dockers.
Speaker 1: Yeah, I mean, as we shared yesterday, we are exploring
Speaker 1: strategic options and our intention is to sell the brand
Speaker 1: to the right potential buyer. I'm actually quite confident in that,
Speaker 1: but we're all doing our homework around that. But to
Speaker 1: your question, this is all about distorting our resources against
Speaker 1: largely the Levi's brand.
Speaker 3: We see so much.
Speaker 1: Opportunity for that, for that brand and for that business,
Speaker 1: and also accelerating beyond yoga as I just mentioned, But
Speaker 1: as it relates to the Levi's brand. You know today
Speaker 1: Levi's and for we've been in business for one hundred
Speaker 1: and seventy years and we're really known and famous for
Speaker 1: the blue gene of course the five oh one, but
Speaker 1: we see an opportunity that's much greater and really evolving
Speaker 1: the brand to stand for head to toe denim lifestyle,
Speaker 1: and you know, that's a big part of how we're
Speaker 1: seeing the momentum in our business. You know, we talk
Speaker 1: about the Levi's brand being up five percent, Well, that
Speaker 1: was driven by the strength of our direct to consumer business,
Speaker 1: both in our stores and e commerce. DTC was up
Speaker 1: twelve percent, e commerce up almost twenty percent, and we're
Speaker 1: seeing that across the world. And you know, I'd say
Speaker 1: two things underneath that real strength and opportunity in women's.
Speaker 3: Women's is about a third of our business.
Speaker 1: Today, that should be half, and we're well on the path.
Speaker 1: And then head to toe, whether that's denim dressing, denim lifestyle,
Speaker 1: and even talks to complement our bottoms.
Speaker 3: So there's just so much opportunity. So as we.
Speaker 1: Really focus on Levi's, like I.
Speaker 3: Said, we see accelerating into the future.
Speaker 4: Michelle, I'm sure a lot of investors would love to
Speaker 4: see that continued investment. But one more on the Dockers
Speaker 4: sale here, because the faster you would be able to
Speaker 4: sell it, the faster you would have that money to reinvest.
Speaker 4: You know, how soon do you think you can exit
Speaker 4: the Docker's brand?
Speaker 1: Yeah, I'd say we just We just announced it yesterday.
Speaker 1: We have a great team working on it, so we're
Speaker 1: not putting a timeline, but we'll keep you posted.
Speaker 5: I wonder about the styles. You know, if you look
Speaker 5: across the more expensive Japanese denim, you can see three hundred,
Speaker 5: four hundred dollars prices for Samurai and Ironheart. You're almost
Speaker 5: there with like nineteen thirty three five Oho ones. Do
Speaker 5: you feel like you have any those are like two
Speaker 5: ninety five?
Speaker 1: Right?
Speaker 5: Do you feel like you have any pricing power? You're
Speaker 5: pushing higher?
Speaker 3: Absolutely? I mean, one of the amazing things.
Speaker 1: About this brand is just how broad we connect with
Speaker 1: consumers across all demographics around the world, and we want
Speaker 1: to be there for our consumers. So whether that's more
Speaker 1: of kind of your entry level price point all the
Speaker 1: way up to very aspirational types of denim, and we
Speaker 1: do salvage Japanese Denim, and we're doing that around the world,
Speaker 1: including here in the US. And I think as you
Speaker 1: were just pointing to, you know, vintage Levi's, I mean,
Speaker 1: you know, the real testament to the strength of this
Speaker 1: brand is if you're buying vintage Levi's, the kinds of
Speaker 1: prices that people will pay for that is pretty darn amazing. So,
Speaker 1: like I said, that's all part of you know, the
Speaker 1: long term potential opportunity for this business.
Speaker 3: Well, it's very cool, kay.
Speaker 5: You can get the actual genes, at least the cut
Speaker 5: that they made in eighteen ninety. If you're more of
Speaker 5: a thirties person, they have thirty three I think are
Speaker 5: thirty seven. You can get forties, fifties, sixties. So I
Speaker 5: think it's a fantastic program and obviously one of the
Speaker 5: most iconic names in denim.
Speaker 3: I'm so I'm so.
Speaker 1: Glad you brought that up because you know, as you know,
Speaker 1: given our authority and authenticity, I mean.
Speaker 3: We actually do have a vault where we.
Speaker 1: Have literally the original pair of Levi's genes and lots
Speaker 1: of other iterations.
Speaker 3: Our teams are.
Speaker 1: Constantly kind of scouring the world looking for inspiration, and
Speaker 1: so we do our designers do take inspiration from some
Speaker 1: of our vintage genes and we replicate those and they're
Speaker 1: super popular with our consumers.
Speaker 3: Yeah.
Speaker 2: Absolutely, you really spend the time spectrum there and brand
Speaker 2: loyalty is there for Levi's I do want to talk
Speaker 2: about Beyond Yoga though, and I don't know if you
Speaker 2: have denim yoga clothes, maybe that's in the pipeline there.
Speaker 2: But let's talk a little bit about the right down
Speaker 2: of Beyond Yoga. I know that you recently acquired this one,
Speaker 2: and not really asking about the magnitude, but the fact
Speaker 2: that you wrote it down at all, I mean, what
Speaker 2: is that say basically about whether or not it's meeting
Speaker 2: it's targets.
Speaker 3: What the future is there? Yeah, no great question.
Speaker 1: So we are very committed to Beyond Yoga and we
Speaker 1: are in the very early chapters of the potential of
Speaker 1: that brand.
Speaker 3: We did take a write down this.
Speaker 1: Quarter, really reflecting the path we're on to make sure
Speaker 1: that we have a thoughtful, prudent path on both growth
Speaker 1: and profitability in our investments. But really this is about
Speaker 1: again the long term opportunity for Beyond Yoga.
Speaker 3: It had a great quarter.
Speaker 1: We are up almost twenty percent and we've seen that
Speaker 1: double digit growth for some time. I think importantly, we
Speaker 1: are investing in this business and brand.
Speaker 3: We brought in new leadership Nancy Green, who.
Speaker 1: Is an apparel and retail veteran. She's brought in new
Speaker 1: capabilities and team members and over time, you know, this
Speaker 1: brand should be at least a half a billion dollars.
Speaker 1: You know, when we think about Levi's really owning denim
Speaker 1: and denim lifestyle, having beyond yoga, really stem the closet
Speaker 1: into active and ath leisure.
Speaker 3: We feel like this.
Speaker 1: Is just a phenomenal platform for Ellis and Code to
Speaker 1: operate in.
Speaker 4: Michelle, I want to go to something very fun. Right,
Speaker 4: you had teamed up with Beyonce here in an exclusive
Speaker 4: ad campaign. Beyonce is Queen. After all, she couldn't have
Speaker 4: come cheap. I'm wondering at the end of the day,
Speaker 4: what does this give you? Has she helped you reach
Speaker 4: new communities?
Speaker 3: What's the payoffs? Yeah?
Speaker 1: Well, first let me say, you know, we are so
Speaker 1: honored to have this partnership with Beyonce. You know, this
Speaker 1: comes after literally decades of having a relationship with her,
Speaker 1: dating back even to the nineties, and we've been a
Speaker 1: fan of Beyonce for a long time, and yeah, I
Speaker 1: believe she's been a fan of Levi's as well, and
Speaker 1: clearly earlier this year, we were so honored that she
Speaker 1: named a song after us on her new album, Levi's Jeans,
Speaker 1: and that sort of then led into a conversation of
Speaker 1: what was possible and here we are just Monday launching this.
Speaker 3: You know, what I would call breakthrough campaign.
Speaker 1: I mean, while we have worked with celebrities in the
Speaker 1: past and influencers and designers and the like, I mean
Speaker 1: this partnership takes us to a whole new level. I mean,
Speaker 1: she is a global icon right across art and music
Speaker 1: and fashion, and it just made so much sense for us.
Speaker 1: I mean, Levi's the brand is at its best when
Speaker 1: we're at the center of culture, and there's nobody better
Speaker 1: than Beyonce to be our partner in that and accelerating
Speaker 1: women's I mean, you know, over the next couple of years,
Speaker 1: our plan is to really take.
Speaker 3: That to the next level.
Speaker 1: So we expect, you know, through Beyonce, all that she
Speaker 1: means and candidly the reach she has. I mean, she's
Speaker 1: got hundreds of millions of followers. Like I said that
Speaker 1: this is going to be a great partnership for the business.
Speaker 5: Can I ask you just for the overall picture on labor,
Speaker 5: what your employee head count looks like and which direction
Speaker 5: it's going. I mean, are you looking to addmployees for
Speaker 5: more production? Do you need to shut down in order
Speaker 5: to write size? What are your plans in terms of
Speaker 5: your workers?
Speaker 3: Yeah?
Speaker 1: So around the world Ellis and Co. We have about
Speaker 1: twenty thousand employees.
Speaker 3: Great. I mean, we have a phenomenal culture.
Speaker 1: I am inspired every day whether I'm working with the
Speaker 1: team here or out in the field, working with our
Speaker 1: teams in our stores and our distribution centers. And as
Speaker 1: I said earlier, our intent is to grow this business.
Speaker 3: We're six billion today.
Speaker 1: A little more than that taking that to ten billion
Speaker 1: in overtime, we will be hiring more great Levi's employees
Speaker 1: to bring phenomenal experiences to our fans all over the world.
Speaker 1: I mean a big part of our growth strategy is
Speaker 1: around direct to consumer and building more stores across many markets.
Speaker 3: So for us, it's.
Speaker 1: About growth and it's about profitable growth.
Speaker 3: And like I said, we look forward.
Speaker 1: To welcoming many new employees into Levi's overtime y'all.
Speaker 3: Thanks so much.
Speaker 5: Michelle Goss there of Levi Strauss talking to us about
Speaker 5: their quarter and their outlook as well,