Speaker 1: After a hundred fifty years manufacturing a classic American product,
Speaker 1: Levi's has a tradition of quality and brand awareness that
Speaker 1: few companies can match. Just a few of Levi's Blue
Speaker 1: jeans and a lot of hard miles. The company's name
Speaker 1: is almost synonymous with blue jeans. But this history offered
Speaker 1: little protection when the COVID pandemic devastated global retail in
Speaker 1: early All of a sudden, most of our stores around
Speaker 1: the world were closed like that, and we saw our
Speaker 1: revenues pretty much dry up. As the shock of the
Speaker 1: crisis subsided and economies began to reopen, Levi's and its
Speaker 1: industry peers stood at a crossroads. I think that at
Speaker 1: the end of the day, what was really unique for
Speaker 1: those that took advantage was COVID was this opportunity for
Speaker 1: companies to re fashion their businesses for the future. We
Speaker 1: are going to emerge from the pandemic a much stronger company,
Speaker 1: and now we're saying, okay, what does the next five
Speaker 1: to ten years look like? This is the question VI
Speaker 1: CFO harm Eat Sing grapples with every day as CFO.
Speaker 1: The one important thing is to ensure you you're able
Speaker 1: to connect the dots and always think longer term. I
Speaker 1: think it's critical. Harm Eat Sing has lots of dots
Speaker 1: to connect. He's managing the company's complex advances into digital technology,
Speaker 1: ensuring that it can meet ambitious sustainability targets, and making
Speaker 1: sure that all its processes from sourcing to sales are
Speaker 1: integrated into this transformation. He's an operator and he's he
Speaker 1: understands the business at a very granular level, but can
Speaker 1: also copter up high feet and think about where are
Speaker 1: we going. That's why you could call harm eat Sing
Speaker 1: Levi's chief future officer. Levi's literally invent did the work
Speaker 1: pants that would come to be known as blue jeens,
Speaker 1: patenting a process for sewing rivets into Denham Clothing way
Speaker 1: back in eighteen seventy three. But that pioneer spirit was
Speaker 1: lagging on the financial side of the business. When chipped
Speaker 1: for a hired heart meet Sing in When I joined
Speaker 1: the company eight nine years ago, the batton sheet was
Speaker 1: a constrained We were not investing for growing. We had
Speaker 1: two billion dollars of debt on the balance sheet. We
Speaker 1: were actually spending more money on interest expense than we
Speaker 1: were advertising our brand. And um, you know, one of
Speaker 1: his first missions was to turn the balance sheet from
Speaker 1: a liability into an asset. If he did that, we
Speaker 1: paid down a billion dollars in debt and we started
Speaker 1: reinvesting back in the Levi's brand, and that's been central
Speaker 1: to the turnaround of the business. Revenues grew steadily through
Speaker 1: the decade, peaking in when the company went public. Levi's
Speaker 1: maintained a dominant share of the market for genes. Then
Speaker 1: came the pandemic, and by early all of this progress
Speaker 1: was put on pause. So we saw a billion dollars
Speaker 1: of revenue evaporate that first quarter of the pandemic because
Speaker 1: our stores were closed, our wholesale partner doors were closed.
Speaker 1: As we got into the pandemic, we said, we've got
Speaker 1: to two things. We've got to manage through the crisis,
Speaker 1: which is all about preserving cash, driving profitably, and communicating
Speaker 1: with all our stakeholders. But importantly, we had to emerge
Speaker 1: stronger because the consumer and employee experiences were changing. What
Speaker 1: are some decisions you made under pandemic pressure that you're
Speaker 1: really proud of. We pivoted to a new strategic blueprint.
Speaker 1: The pivot was on three basic things. Elevation of the brand,
Speaker 1: um acceleration of a director consumer business and diversifying a
Speaker 1: product based a number of brands. We just closed the
Speaker 1: deal and entered the active ast segment beyond yoga. The
Speaker 1: other thing we did was we continue to rest for
Speaker 1: the long term, so we invested a lot more capital
Speaker 1: in accelerating our e commerce business. E commerce is becoming
Speaker 1: a bigger piece of a business is profitable today as
Speaker 1: well as we spend the time ensuring that we balanced
Speaker 1: all stakeholders. So for example, we took the unfortunate decision
Speaker 1: of letting people off, but we cut dividends. We also
Speaker 1: extended you know, our benefits. We introduced paid sickly because
Speaker 1: ensuring safety and health of our frontline staff was critical.
Speaker 1: So I think the decisions we were taking were guided,
Speaker 1: but not only to emerge stronger financially, but also ensuring
Speaker 1: that our values as a company continued resonant with all
Speaker 1: our stakeholders. In the middle of the pandemic, suddenly there's
Speaker 1: this shift away from skinny jeans and toward mom jeans.
Speaker 1: Was this disruption a huge benefit to Levis because people
Speaker 1: are now turning over their wardrobes. They want something new. Yeah,
Speaker 1: you know, under research of all ways, sizes had changed
Speaker 1: during the pandemic. Some went up, someone down, both for
Speaker 1: him as well as he That does mean that you've
Speaker 1: got to go back and make a change in your closet.
Speaker 1: And you you you tend to um engage with brands
Speaker 1: that are engaging with you. So I think a combination
Speaker 1: of direct engagement with the consumer, even doing to tough times,
Speaker 1: investing in things like growing e commerce. I think things
Speaker 1: that will continue to resonate. Where is Levi's on that
Speaker 1: path right now to a digital future? Today? Our digital
Speaker 1: ecosystem is about our total business very profitable. We aspire
Speaker 1: to make this a third of our business. Direct to
Speaker 1: consumer business, which includes our stores is about forty of
Speaker 1: our business. It used to be half that years ago.
Speaker 1: We aspire to grow that to about you know, six
Speaker 1: or two thirds of our business. If the analogy is
Speaker 1: a baseball energy where are we uh, I'd say we're
Speaker 1: bottom of the four teenings. We've got a long runway
Speaker 1: for growth. So supply chain disruption, commodity costs, this is
Speaker 1: all putting pressure on the process of bringing anything to market.
Speaker 1: What is the new normal going to be there? When
Speaker 1: it comes to supply chain disruption, pricing issues, etcetera. If
Speaker 1: you think of supply chain, think of two broad buckets.
Speaker 1: One is sourcing and second is is commodity and costing.
Speaker 1: On the sourcing side, very early on we said we
Speaker 1: won't put all eggs in one basket, and um so
Speaker 1: um we sourced across twenty four countries. Um not from
Speaker 1: any single country. Do we source more than you talked
Speaker 1: about costs? You know, given our global buying power, we've
Speaker 1: already negotiated the first half of the year a very
Speaker 1: low single digit inflation relative to last year. The one
Speaker 1: thing that because the brand so hard has been really
Speaker 1: resonating with the consumers, we've continued to take pricing even
Speaker 1: during the pandemic. The brand today has pricing file LEVI.
Speaker 1: Full year revenues are on track to match fulfilling the
Speaker 1: company's pledge to emerge stronger from the COVID crisis. We
Speaker 1: committed in the middle of the pandemic that when our
Speaker 1: revenues got back to pre pandemic levels, our margins would
Speaker 1: be up more than two points and we've now delivered
Speaker 1: on that. But with the virus still weighing on consumer
Speaker 1: confidence and supply chains and inflation surging around the globe,
Speaker 1: This is no time for any retailer to relax. As
Speaker 1: you look forward over here, I think the biggest question
Speaker 1: is who's going to take the learnings from the pandemic
Speaker 1: versus who's just gonna fay back to what they did
Speaker 1: in the past. UM. I think over time, UH, you know,
Speaker 1: because of the learnings people that had during the pandemic. Uh,
Speaker 1: there is going to be um thinking about how do
Speaker 1: you globalize your supply chain. Do you consentrate in a
Speaker 1: few countries, do you diversify, do bring some production home.
Speaker 1: One of the programs we started a couple of years
Speaker 1: ago was our f l X program. It's using lasers
Speaker 1: to finish your denom product. It used to be done
Speaker 1: by hand, it used to be done overseas, but now
Speaker 1: we bring in the blanks and we finished it closer
Speaker 1: to markets. And so we're in the process of expanding
Speaker 1: that program around the world. So I think people need
Speaker 1: to just think about different ways of doing it, and
Speaker 1: I believe technology will play a key role. Her meat
Speaker 1: sayings affinity for Levi's tracks all the way back to
Speaker 1: when he was a teenager in India. I had an
Speaker 1: aunt who's coming overseas and she said, what do you
Speaker 1: want and I said, I want to pay a Levis.
Speaker 1: At an early age, he decided to study finance. I
Speaker 1: did my CPOOR chart of the counting seat with a
Speaker 1: goal that I wanted to start my own CPF phone.
Speaker 1: The allure of entrepreneurship faded when her Meat got married
Speaker 1: and started a family. He took a job as a
Speaker 1: financial analyst at American Express in India. If someone has
Speaker 1: told me at that point, her Meat you would be
Speaker 1: working in the US would be CFO of two large
Speaker 1: American icons, hight And and Levi's, take two companies public,
Speaker 1: I would have bet against it. Her Meat Singh first
Speaker 1: reached the C suite in the US when he was
Speaker 1: named chief financial officer of Pizza Hut. He then took
Speaker 1: the same role at parent company Yum Restaurants. After a
Speaker 1: successful stint as CFO for Hyde Hotels, Chipburg hired him
Speaker 1: at Levi's in January. I've been very fortunate, been lucky,
Speaker 1: have had great mentors, and you know, one thing has
Speaker 1: led to the other. Throughout their time working together, Chipburg
Speaker 1: and Harmeat Singh have been partners in a steady push
Speaker 1: to make Levi's more sustainable. First, it's not something that
Speaker 1: we just started. It's been in our DNA, as people
Speaker 1: in the company would say, it's woven into our fabric.
Speaker 1: Her meat has been driving a lot of the investments
Speaker 1: behind making this company a more sustainable company. Many of
Speaker 1: these investments have gone into the Eureka Innovation Lab, a
Speaker 1: research and development center a few blocks from corporate headquarters.
Speaker 1: Progress made here has helped levi significantly reduced its greenhouse
Speaker 1: gas emissions and water use in the past decade, and
Speaker 1: now Levi's has made sustainability a central pillar of its
Speaker 1: consumer strategy with a highly non traditional, even counterintuitive ad campaign,
Speaker 1: buy Better Where Longer. We had a lot of internal
Speaker 1: debates about you know, is the selling idea by better
Speaker 1: where Longer going to reduce consumption? You know, I fundamentally
Speaker 1: believe that it plays to our strong suit. It is
Speaker 1: kind of it almost defines what the Levi's brand is
Speaker 1: all about. We believe because you know, the younger generation,
Speaker 1: the millennials for them, you know, interacting and engaging with
Speaker 1: consumer of companies that aspire to be most sustainable has
Speaker 1: allowed us to reach out to newer consumers. So even
Speaker 1: though people may buy less, we believe we're reaching out
Speaker 1: a lot more new consumers, and that's why it actually,
Speaker 1: in our view, it actually will grow the revenue and
Speaker 1: grow profitability while at the same time ensuring you know
Speaker 1: that our products are sustainable, be doing the right thing
Speaker 1: for the planet. The way longer theme is meeting a moment.
Speaker 1: According to research by Global Data between resale, clothing doubled
Speaker 1: as a share of the consumer closet and could potentially
Speaker 1: double again by Levi's has put its own stamp on
Speaker 1: reconditioning and resale with tailor shops as a feature of
Speaker 1: its stores. It allows us to directly engage with the consumer.
Speaker 1: We started the tailor shops in Europe. It was a
Speaker 1: runaway success and now we expanded around the world. Most
Speaker 1: of our stores in the US have it all. Our
Speaker 1: next gen stores, which are our latest format, have tailor's shops.
Speaker 1: We're taking the reins in our own hands. It's a
Speaker 1: I think the addressable side of the market is about
Speaker 1: dollars and we've just um you know, entered it. So
Speaker 1: that's clearly an opportunity for us. In Levi's issued its
Speaker 1: first standalone sustainability report. It covers environmental, social and governance issues,
Speaker 1: outlining programs priorities and principles and setting ambitious targets for performance.
Speaker 1: It will be up to harm Eat Singh and Chief
Speaker 1: Operating Officer Liz O'Neil to execute the plans they helped devise.
Speaker 1: Harmat and I work together a lot on figuring out
Speaker 1: what is the what's the strategic direction, how are we
Speaker 1: going to get there, and how are we going to
Speaker 1: invest in order to actually make that a reality. What
Speaker 1: falls under the CEO umbrella and the f O umbrella
Speaker 1: and where did those over overlap? Well, sustainability reports in
Speaker 1: through me, so I have the supply chain as well
Speaker 1: as the sustainability team UM, but nothing happens without the CFO. UM.
Speaker 1: The CFO is imperative to this and and honestly, right
Speaker 1: now we're in such a big transformation as an industry.
Speaker 1: As we try to transform, we need the help of
Speaker 1: the CFO to really help us figure out what are
Speaker 1: those focus areas and how do we distort our resources
Speaker 1: and our investments to those areas that are going to
Speaker 1: matter most. Every year we do a strategic business plan. UM.
Speaker 1: You're one of the few companies where E s G
Speaker 1: and sustainability is the cornerstone of a to digic plan
Speaker 1: and thinking about, Okay, you're saving all this money in negotiations.
Speaker 1: Are you going to drop it to the profitability or
Speaker 1: are you going to invest for the long term? Think
Speaker 1: about this place right. People ask me, is this getting
Speaker 1: you the payback? I say, you can't measure this from
Speaker 1: a payback of our innovation is coming from here. We
Speaker 1: are building for tomorrow. You know this is you know,
Speaker 1: it's a very easy answer. You're getting the payback. And
Speaker 1: I think that's the discussion that happens on a regular basis.
Speaker 1: Singing O'Neill showed me how that discussion is driving levies
Speaker 1: through a major shift from hardware traditional resource intensive manufacturing
Speaker 1: processes to software. They gave me an iPad and told
Speaker 1: me to design the genes of my dreams. You can
Speaker 1: come down here and we all love our damaged and
Speaker 1: destructive genes, so you can love this little damage. We
Speaker 1: can add damage. But that wasn't even the coolest part.
Speaker 1: So what do you customize? The well come to life?
Speaker 1: So we're going to see my damages on there. Oh
Speaker 1: my goodness, it's happening in real at times like that,
Speaker 1: a distressed pair of levies that just needs one short
Speaker 1: wash to be ready to wear. This technology is already
Speaker 1: in use and already delivering results. We've reduced the amount
Speaker 1: of water by almost across most of our product line
Speaker 1: over the last ten years, saving billions of leaders of
Speaker 1: water um finding new ways to finish the genes that
Speaker 1: are just much more sustainable. How long can you recycle
Speaker 1: the water for? How long before you have to dispose
Speaker 1: of it? Well, we with the laser finishing that we
Speaker 1: use in many of the factories, we can recycle the
Speaker 1: water virtually endlessly. So on the right these are traditional
Speaker 1: washing machines. They use a lot of water. Right on
Speaker 1: the left is an ozone driven washing machine, no water,
Speaker 1: and so it washes the pants exactly and using this technology.
Speaker 1: All our factories now use that technology. And if you
Speaker 1: go back and look at how much water we have
Speaker 1: saved since two thousand eleven, is approximately thirteen million liters
Speaker 1: of water. Her Meat Singh has taken his commitment to
Speaker 1: sustainability beyond his role at Levi's. He's a leader among
Speaker 1: financial executives who want their work to help protect the
Speaker 1: future of the planet. Print Shaws has an organizations all
Speaker 1: accounting for sustainability. He started this probably ten twelve years
Speaker 1: ago and today I am the uh you know, the
Speaker 1: coal chair for the U S chapter. What we're doing
Speaker 1: as a group of CFOs is we're sharing best practices.
Speaker 1: We're engaged with investors. We also engaged with the SEC,
Speaker 1: the I f S as they established disclosure standards. So
Speaker 1: I think, you know, it's the least I can do
Speaker 1: on something that's so important. Leavi cfo har meet Thing
Speaker 1: loves sports. He played basketball and cricket growing up in
Speaker 1: India and more recently took up golf. What do you
Speaker 1: love about sports? Are you ultra competitive? Does it help
Speaker 1: you relax or decompress? I like to win, but win
Speaker 1: the right way. But it also gets me to relax
Speaker 1: because you know, I like to associate, you know, a
Speaker 1: little bit of downtime, watch a game of golf, play
Speaker 1: a game of golf, see some cricket. So I think
Speaker 1: a good combination of both. You have created your own
Speaker 1: award tied to cricket for your team he Levise. It's
Speaker 1: called hit for Sex. What I tell people is it's
Speaker 1: like knocking the ball out of the park, so link
Speaker 1: it back to baseball. It's a home run and I
Speaker 1: give it to folks who um, you know, go beyond
Speaker 1: their normal job and make a big difference. I'm a
Speaker 1: big believer in recognizing good work because I think that
Speaker 1: really helps motivate people, motivate teams. And you know, people
Speaker 1: believed in me, and that's why I'm here, so in
Speaker 1: my job to believe in people from talent. Sports and
Speaker 1: business also intersected for saying when Levi's purchased naming rights
Speaker 1: to the San Francisco forty Niners new stadium, although at
Speaker 1: first he was blindsided by the deal, that was a
Speaker 1: week into this role, the balance sheet was constrained. He
Speaker 1: walks into my office because he's a he's built brands,
Speaker 1: and he says, what do you think of naming rights
Speaker 1: forum Levi Stadium? And I said, how much is gonna cost?
Speaker 1: And he says, you know, a small sum of two
Speaker 1: hundred million dollars. I said, really, have I gotten into
Speaker 1: their own company? We got together and said, okay, how
Speaker 1: do we make this happen and make this a success?
Speaker 1: And um, you know the forty Linders did well that
Speaker 1: you know they we had a Super Bowl and a
Speaker 1: couple of years into it and everybody goes there, I'd
Speaker 1: say a dresses casually, hopefully a lot more casual after
Speaker 1: the pandemic, but a lot of them are wearing our products,
Speaker 1: so it's really resonant with who we are. A brand
Speaker 1: with a fifty year history isn't going to change its
Speaker 1: core identity even after a disruption like the pandemic. But Levi's,
Speaker 1: like retail companies everywhere, is determined to build lessons from
Speaker 1: the last two years into a vision for the future.
Speaker 1: We have to sustain what we have emerged out of
Speaker 1: um Ensuring that we continue to invest in the digital
Speaker 1: transformation of the company is critical. Transforming the digital doesn't
Speaker 1: mean abandoning physical retail. Even though Bloomberg Intelligence sees brick
Speaker 1: and mortar apparel sales declining from a peak, BMO Capital
Speaker 1: Managing Director Simeon Seagull says stores still have an important
Speaker 1: place in the omni channel mix. The retail model in
Speaker 1: the past worked for a reason and it still does,
Speaker 1: so disrupting doesn't mean destroying. The consumer doesn't wake up
Speaker 1: in the morning and go today is going to be
Speaker 1: a brick and mortar day, or today is going to
Speaker 1: be an e commerce stay. They wake up and they go,
Speaker 1: I want to buy a pair of Levi's. I think
Speaker 1: what we're going to find is omni channel doesn't mean
Speaker 1: being everywhere for everyone. It probably means using everything that
Speaker 1: you have to the best of its ability and figuring
Speaker 1: out how to represent Once you know what you want
Speaker 1: to do, from sales channels to sustainability, from profit margins
Speaker 1: to core principles. Her meat Singh will be making decisions
Speaker 1: that God Levies into the future. So I asked him
Speaker 1: what he sees when he looks ahead. What's the opportunity
Speaker 1: for Levies in the next ten years that excites you most.
Speaker 1: I think, you know, owning a bigger share off the closet,
Speaker 1: and it's not only denim, it's also active, is not
Speaker 1: only bottoms, it's owning tops and so diversifying up product base. Um.
Speaker 1: You know, currently we have you know, a big brand
Speaker 1: in Levi's. We just born Beyond Yoga, and the question
Speaker 1: is can we make the company with a company that
Speaker 1: has more portfolio brands longer term? What's the challenge for
Speaker 1: Levi's in the next ten years that keeps you up
Speaker 1: at night? I'd say, you know, going through different crisis
Speaker 1: because there's you know, living in a very uncertain world.
Speaker 1: I think dealing with issues like climate I would say,
Speaker 1: cyber security UM and the dangers offered UM. I'd say
Speaker 1: in showing that we balance UM, you know, all our
Speaker 1: stakeholders without disappointing any as well as growing the market
Speaker 1: cap of the company, which you've done successfully over the
Speaker 1: last couple of years. So quite a few things are
Speaker 1: keeping you up at night. Yeah, you know, I'm seven
Speaker 1: person and I love thinking about as here for the
Speaker 1: one important thing is to ensure you you're able to
Speaker 1: connect the dots and just making sure we're able to
Speaker 1: do that UM and always think longer term. I think
Speaker 1: it's critical. How do you see your role as CFO
Speaker 1: changing in the next decade. I'd say UM having a
Speaker 1: broader influence around a lot of many things. I think
Speaker 1: the UM the desire to unlock not only shareholder value,
Speaker 1: but also stakehold of value I think becomes important UM.
Speaker 1: I think the desire to build UM a very successful team,
Speaker 1: a talent that is diverse and is making an impact
Speaker 1: through the organization. I think it's critical. What's a skill set,
Speaker 1: skill area that you think every CFO will need to
Speaker 1: harm in the next decade. I think listening, being empathetic,
Speaker 1: building trust, um by being authentic, I think are going
Speaker 1: to be really critical skills that CFOs probably need longer term.
Speaker 1: What advice would you give to a CFO who got
Speaker 1: promoted today, Learn the business, build your relationships, and don't
Speaker 1: unleash the playbook that you grew up with. Make it
Speaker 1: relevant to the circumstance in the situation, because a lot
Speaker 1: of times people just come with a playbook can say Okay,
Speaker 1: we're gonna roll that. Don't do that. Think longer term,
Speaker 1: UM and build your equity, but with a longer term perspective,
Speaker 1: look forward, not backward, and don't rely on what worked before.
Speaker 1: Not what you'd expect from a steward of an American icon,
Speaker 1: but exactly what makes harmonad sing Levi Chief Future Officer.
Speaker 1: I'm Emily Chang. This is Bloomberg