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Well about two weeks ago. Back on November TEWOD, Levi Strauss came out with earnings and they lowered their revenue growth outlook for the full year. The results showed that Levi Strauss is making progress toward its goal of becoming more reliant on its own stores and on e commerce, but weakness in other areas is also holding the company back. Shares fell as much as close to twelve percent that day.
They ended up closing down seven point seven percent. On the day after those numbers came out, we got back with us. Harmeat Singh, chief financial officer over at Levi Strauss and Company. He joins us here in the Bloomberg Interactive Brokers Studio. Good to see you.
Welcome, Yeah, thanks for having me, Tim and Molly.
Hey, if you're watching us on YouTube or Bloomberg Originals, you can see that you are just head to toe in denim rw H two T. I don't know which Levi's jeans you're wearing.
And these are new Losive fits.
The five six eights Okay, he's got the five six eights on. You got the denim shirt, which looks great.
With the Western way the Western okay, yeah, beyond you know we've signed up Beyonce. Yeah, we're gonna talk about we'll talk about that, right, Okay.
And you need a jacket, so you've got a denim jacket on as well.
Yeah, but then what.
About the outerword jacket when you go outside.
It's cold here, I know, but this jacket does protect me. The good news is we have a line of out of way just hitting our stoves for the ready.
My question, do you always dress like this every day?
Yeah?
I mean that's the beauty of working at Lew's. You can wear the brands, you can wear it to work, you can wear two interviews like this, you can wear it to a formally went and people give you the latitude.
Well it's good right now because no question, Denhim is having a moment, So you don't really look out of place when you're wearing a lot of Denhim. But I'm wondering how long that lasts, like because there have been moments like this when it comes to the history of the company, when it comes to fashion over the last few decades where Denham has gone in and out. How do you think about that? As CFO?
Yeah, no, So we are the market leader and the as the market leader, market leader, and men's market leaders now and women's as the market leader. You know, our responsibility is to lead trends and drive people towards our products. You know, we're focused on what we call denim lifestyle, which is more head to toe across both men's and women's. You're wrapping it, yeah, and I'm rapping it. You can see, you know, the other folks, But denim is having a moment,
as you call it. The last cycle started with the skinny way back into in the late late two thousand and seven, two thousand and eight. That lasted for about eight nine years. We were the first to introduce the loser fit just before COVID, and it took off post COVID. And you know, the other thing that we really focused on is because the words become a lot more casual after COVID. You see it in a hybrid work culture,
you see it in other social occasions. And so we are making a stronger pivot to the non denim piece of our apparel for men we've got something called performance deech. It's like the ABC Lulu pant, and that's really gaining traction. And so as we think about, you know, growing the business, it's about owning a larger share of the closet without you know, taking the eye off the ball on what we're really known for, which is denim. And so it's all about denim lifestyle.
I would think a lot of it right now too, is about wide legged dnimal. I mean that is just like we had a great story about this recently about you know, women in particular who are buying you know, roughly one hundred dollars wide legged jeans and then the seven hundred dollars wardrobe to go along with it. Jim's
eyes just bulg. So yeah, all the rest of maybe like the crops, weaters and jackets, because if you've got like a waist that's coming up kind of high, then you want the shirt to kind of hit roughly around there. I'm learning this. I have a style of She's tell me all about it. So yeah, I mean, obviously, Hermie, you could tell us more about this.
It's actually you hit the nail on the head. I was going to talk to you about it. But it's not only about bottoms, and as the as the fits for the bottom change, you know, so do the tops, and so as we think about denim lifestyle, we're also focused on growing our tops business, which was up nicely in quarter three. You know, it's up eight percent. Sorry
I think eight percent. But overall, what you saw in quarter three largely was that Levi's as a brand grew five percent, and that's the strongest growth we have had in Levi's over two years. Sequentially, it's getting better and that's why, as we talked about quarter four, while we took our overall guidance for the year down, you know, our belief is sequentially quarter fours is you know, slightly better than quarter three.
Well, if if Dunham is having this moment, then why don't you think investors are buying into this? Levi Strauss shares up about twelve percent so far this year, underperforming the S and P five hundred. Why aren't investors buying into this?
Yeah? I think you know what we've done this year is we've narrowed focus into Levi's and beyond yoga. You know, we announced the exit of Dockers. The Dockers was underperforming. We had a smaller footwear business really based out of Europe. We are exiting that, and we were present in Target through our Denisen brand. We introduced Levi's Red Tab in Target that you know had a good run. So you know, we thought it was better to focus on Levi's than
Red Tab. And so as you think about it, I think the fact that we are transforming in the year while are we trying to perform and performing really well on Levi's, is I think why people are just saying, Okay, let the transformation you know, get complete and we'll buy in. But overall, you know, Levi's as a stock over the last twelve months has had a decent run. We're long on the stock, We're long on you know, trends of
the business. Our longer term goal is to take the six billion dollar business and make it more like a ten dollar ten billion dollar business, improving our operating margins by a couple of percentage points. The other thing that is happening in the business is this transformation into more
of a d d C first business. It doesn't mean DDC only, it does mean, you know, we lead with DDC, which is our stores, our e commerce and wholesale compliments are are direct to consumer business, and that transformation is taking ship today. DDC is about half our business when I joined, is about a fifth of our business.
We're going to get more on directing consumer in just a minute. But you mentioned doctors, so I wanted to talk to you a little bit about the options for doctors. You did announce that you're looking to sell the business when I when I heard that, I think to myself, this is like a perfect fit for authentic brands group. Jamie Stalter is like, uh, you know, Jamie Salter's group. He's got Airwalk, air Apostle, Billibong, DC, Greg Norman, Eddie Bauer, Champion Fry. I mean, I'm only down to F at
that point in the alphabet. He's got everything over there down to Volcom. Does that make sense?
You know.
I won't comment about perspective bias. I would say that the reason we announced the exit of Docers we created Docers, Okay, so it's a homegrown brand that had a wonderful run for a long period of time. We launched Docers just to uh, you know, take advantage of the casual Friday that was said in the in the mid to late eighties. The what has happened is it's in a low growth category.
And I'm a you know, we're a fun believer that what this does is unlocked dockers with somebody who can take it to the next level while we concentrated on taking Levis to the next level. I've been part of spin spinoffs and I've seen that happen. To your question about you know, perspective buiers, we announced it so that we would probably hear from perspective bias is early days.
Our intent is to sell it, uh, and intend to sell it to bias that can not only take the brand to the next level, protect as many employees of doctors as they can and UH, and we'll see where this goes. Uh. Phones are ringing, which is the good news. These transactions take time, and you know, when we have something to talk about us who's the perspective acquired, we'll definitely you know, talk about that.
You just call us, Yeah, just pass their phone calls maybe onto us. When those phones are ringing. I mean, what kind of timeline do you think is reasonable to look at something like that to really complete that kind of a space.
It's a strong brand and in our view is something like this, you know, can take six to nine months. You know, what we're really interested is is ensure that it's a right buyer who does the right thing for the brand. Uh. And so you know we're going to do it in a fast way, but we'll do it the right way.
Right. Well, I mean, I think this is the time where we pivot to Beyonce. I mean, tell us more about this partnership. I think a lot of people want to know about it when what exactly like her role is with the brand here, Like, is Beyonce like straight up designing Levi's clothes?
Now?
Like, can I get a Beyonce designed pair of Levi's geens?
No, it's it's not about a product collaboration. It's about a partnership with someone. You know, she's an icon. She's been in the center of culture. You know. You know she her values and our values resonate. You know, she's been a supporter of the brand for years, for decades.
And when she named a song after boy Carter co Carter and the song Levi's that was organic she you know, in nineteen I remember she she was at Coachella and was wearing US shots again a very organic, you know, uh thing that she did, and you know, product sales went up on the shots. So you know, we kind of sat back and said, you know, it's a it's
a it's been a great partnership. Could we take it to the next level and having somebody like her support our brand, support the iconic apparel that we have, the five or ones for example, the T shirts. Actually actually, you know, I think we think it's a win win for both Beyonce as well as us. Plus, you know, we're leaning heavily into driving our women's business about a
third of our business. We see no reason why it shouldn't be half our business, right and I think you know, she has uh, you know, many fans around the world, and I think the combination of the two brands would make a difference.
Just well fifty seconds and then we're going to come back for more with you. Have you already noticed a higher sales figure or more loyalty on the back of this campaign.
You know, it's early days with a campaign. This is the it's a twelve month partnership. We just launched the first chapter. You know, we'll have three other chapters. But what I can say is, you know, difficult to link, you know, a brand advertising with dregs sales. But what I could say right now is as we close quarter three, which we just reported, women's sales were up, you know,
close to eleven percent. I Iconic five oh one was up double digit and I you know, so that's what we believe continues over time.
Our meat stick with us. We're going to come back with her Meat Singh, chief financial officer at Levi Strassen Company. He joins us here in the Bloomberg Interactive at Brokers studio. You're listening to and watching Bloomberg Business Week. I want to get right back to har Meat Singh, chief financial Officer at Levi Strauss Company. He joins us here in the Bloomberg Interactive Brokers studio. We were chatting a little bit and I was telling you you've been at the
company what since twenty thirteen. Yeah, you guys went public about five years ago again on the New York Stock Exchange. I was at that IPO because I was working on the floor of the exchange back then, and you guys were able to do something that I think in the you know, more than one hundred year history of the New York Stock Exchange has not ever been done before, which is allowed jeans on the floor on the trading floor.
There.
There's a lot of rules of the New York Stock Exchange. One of them is no genes allowed. I came in that day, everybody was decked out.
In jeans, and wasn't everybody looking great? Oh yeah, Levis, Yeah, it was Lewis jeans. And you know that was you know, part of the deal we did with ny I see, you know, as we were debating Nico and Nastac, you know, we said, hey, if you can change the floor on the day of the listing and make it a denim flow, you know, we are in. And they were able to do that and into a wonderful, you know, wonderful morning and uh, you know, I think beginning of a new chapter.
For the company understanding how things work between the New York Stock Exchange and the NASDAC. I think that they probably didn't even have to check with anyone. They probably just said yes at that moment, Harmida, I promise we get back to the idea of going direct consumer and building that relationship one on one with the consumer.
Uh.
Nike tried to do this over the last few years and they really alienated the foot lockers of the world who were such a big part of their business. And now there's a new CEO Nike. They're trying to turn that ship around, repair that relationship with those retailers. How do you do this but not alienate alienate the brick and mortar stores who for so long have sold your products.
Yeah, I know. We love our wholesale customers. The way strategy, and the second pillow of a strategy is DDC first, but it's not DDC only.
The whole CTC director can a.
Director consumer wholesale is in a big compliment to how we're going to grow the business. You know. The reason d DC is important is allows us to provide more of a head to two assortment. We can drive the consumer experience and it's actually a proof point for wholesale retailers to see how the product is taking ship. So our new product introductions, we have a wonderful product pipeline hits the dd C flow first, the wholesale customers see how it is performing, and then they buy into it.
We need wholesale customers largely because you know, to be the market leader, we have to reach out to consumers in a far and beyond and the only way to do that is is having a combination of a successful DDC business and a successful wholesale business.
So I imagine ideally, like you would love to see the DTC base be new customers, adding like net new customers to the business. But is there a risk that this cannibal lies is the wholesale customer and that they shift over.
Yeah, you know, it's a very good question. I've been asked that a couple of times, and we have not seen any evidence of cannibalization. The other pieces in the US, our d d C offer is what we call tier one and Tier two, so it is the best and the better the offer for wholesale customers, more tier three. We are talking to a few wholesale customers to introduce our tier two offer because in the top fifty to sixty dollars, you know, there is the consumer that wants
the higher tier product. So we're not seeing cannibalization. We also don't see cannibalization between the different two channels within d DC, which is e commerce and our stores and in fact consumers now as you know, you know, like a seamless you know, shopping experience, so our view is that both channels can grow. DDC grows probably faster because we control the channel. We're able to drive the experience and have a head to do.
Assaltman, we're talking a lot about the US election. It's top of mind here for us. My question is not about the politics of this, but about how you're potentially preparing for another Trump administration given the tariffs that you experienced during the first Trump administration, when Trump put European still in aluminum ex sports tariffs on those, and then you guys were hit with tariffs on jeans. So there's that part of it, and then a potential more tariffs
between the US and China. How do you plan for that?
Yeah, you know, we've been around for one hundred and seventy years, you know, and we've seen different administrations. The business and the brand has grown through different administrations, and so from our perspective, you know, we believe that. And you know when we guided quote a full and we talked about a sequential progression, you know, our belief is the brand continues to grow. To your question about tariffs.
A couple of years ago, we were importing from China into the US about fifteen sixteen percent of the product. Over the years, we've scaled that down, so the imports into the US from China about a percentage going instead. And because we have a supply chain, we're able to cross source it across different geographies. So you know, we've been able to cross source it from other countries in Asia and think Vietnam, think Bangladesh, think Pakistan, And that's
really what's really helped us, the cross sourcing strategy. Besides the fact that we're not concentrated significantly in anyone country makes a difference. And so our view is that you know, any administration, you know, we'll be able to continue to grow.
What about retaliatory tariffs from the European Union or other countries on your own products.
Yeah, I think you know, we have a strong business in Europe. If you have to cross source, we can. I think the end of the day is really how does it impact the consumer? You know, tariffs could mean higher pricess for the consumer, and that is something that we will, you know, tackle as the time comes along. Our products provide good value, okay, and if they're in fashion and they're you know, we bring in innovation. The consumer is going to gravitate and open the checkbook to
buy our products. So you know, as we think through it, we have contingency plans in place in case, you know, different scenarios play out and we'll we'll be able to tackle through them.
Is it tempting to think about a fifteen percent corporate tax, right and what you might do with all that money that's not paid in taxes?
You know, I have a wonderful tax group that you know, plan different tax opportunities all the time. But you know, our view is as good corporate citizens, you know, we have to pay the pay the taxes and that.
Is a noble thing to say.
They and you know, at the end of the day, it's very important for us to you know, provide great value to our consumers and build the oil fans, and that's what we focus on.
I gotta say, not many of our guests can pull off head to toe denim. And it's not just that, it's also the shirt as well. Harmy, you're one of those folks who can do that. Har Meat sing cfo at Levi Strauss joining us here in the Bloomberg.
Thanks to him, Thanks Studio Good.
Her Meat's going to be featured in the forthcoming issue of Bloomberg's CFO Briefing newsletter. You can sign up for it now at Bloomberg dot com, slash account, slash newsletters, slash CFO Briefing.
CFO hyphen Briefing.
Oh, don't miss that is not going to work. It will not check out that newsletter though. You also just Bloomberg. Just google Bloomberg Newsletters.
Oh yeah, I'm sure to come up. We got a whole bunch of them out there.
Things Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio and Television.
It is Bloomberg Business Week. That is Molly Smith in for Carol Masser this afternoon. Mary Smith, Bloomberg News Economics Editor.
I think we've hit the director of titles for me today about the same things. Good to be here, Tim, and we'rearded. Yes, I wanted to come in for our final guests of the day. Wow, we're getting really close to the end here. It's been such a nice afternoon.
We're gonna good to have you with us. And we got a great guest right now.
We do.
Yes. So while LGBTQ acceptance is at an all time high, so is bullying and discrimination. We're bringing back Sarah Kate Ellis. She's the CEO and president of GLAD and that stands for help me out here, tim the Oh, my gosh, I should have had this ready, Sarahkate. Sarah Kate's going to bring.
It in Lesbian Alliance Against Defamation. But everybody refers to it these days as GLAD.
That's right, That's why I was so reliant. I'm glad, but I should have had that al ready, my bad. So Sarah Kate. Alice is joining us now. She's here to talk to us on Spirit Day, the world's most visible anti bullying day of action and support of LGBTQ youth. Thanks for joining us here, Sarah Kate. You join us back in June to talk about the complexities around celebrating Pride Day. Hopefully Spirit Day a more positive day. Tell us about that and the celebration around it today.
Yeah, so well, thank you for having me. And we are just glad these days we never we no longer go based on the acronym, so anyway we do this. This is our fourteenth year, and this is about uplifting LGBTQ youth because we actually know they have it the
hardest in this world figuring out who they are. They might not be in accepting environments, they might not be in homes where it's okay to be their true and authentic self, and they're a little trapped, and we wear purple to let them know that we're standing with them, and that we're standing against hate and bullying. And so this is the most visible day for LGBTQ youth to
let them know that we're standing with them. And I throughout the years, this is my eleventh year doing Spirit Day, I've had kids come up to me across the country who said, who are now adults actually, and said that when they were teens and they were living in their hometowns and they couldn't be themselves, they saw Spirit Day and it gave them hope, and it gave them a view into the future. And so that's why we do.
This, Sarah, Sarah Kate. So much has shifted in recent years, in the years that you've been doing this, and also you know, in the close to forty years that CLAD has been around, there's just been huge moments of transformation. One of the things I want to talk to you about today was the ty part of the LGBTQ movement, Because right now, with less than three weeks ago ahead of the election, you see a lot of talk about what legislation is happening, how different people feel about anti
trans bills throughout the United States. It's such a huge topic of conversation. I'm just wondering, from your perspective, what the media is getting wrong in your view, what the presidential candidates are getting wrong, what you believe the electorate needs to understand about the trans movement in the US.
Well, thank you for asking that, because on this day of anti bullying, the biggest bully in town is a presidential candidate who's running Trump and has been for the trans community and is actually running ads in battleground states right now that is trying to use trans people as a political wedge issue. And I just want to say a couple of things about that. One is trans people
are people. They're human, And I think there's such a small piece of the population too to get that so much emphasis when there are so many issues that are so important to Americans today. Actually, the latest poll asked about twenty two issues that were important to Americans. The last issue was twenty two, and that was how people thought about trans issues. People aren't interested in talking about them. They're not kitchen table issues, and they want people to
live in autonomy. That's his American value, to live the life that you love in your own terms, on your own way. So I think that it is being used to create fear and to stoke hate, but it's not a value American value fear and hate, and so it's not polling well. We also did a poll at lad that found out that about fifty percent of voters felt that politicians who villainized and victimized trans people lost them.
They weren't interested in them anymore because they thought, if you treat the most marginalized people that way, how will you treat other people? And so I think it is a really big issue right now because it is being used to create fear in our society.
But it doesn't seem like it's working. To your point, it's not working.
It hasn't worked in the past several elections actually, because there have been a number of politicians. So one thing that is really important for people to understand in context here is that seventy percent of Americans say they don't know someone who's trans, So that means that those people are learning about trans people through the media. And your initial question was, what is the media getting wrong here?
The media is getting wrong that they are repeating or airing this hate and villainization of the trans community because it's not accurate, and so they're stoking the fires by just not giving it context. And so I think it's a really important moment in time for us, and I think it's an opportunity. At LAD. What we did was we created ads. You can see a bunch of them at here we are now dot com, and we're running them in those battleground states because it's introducing trans people
to everyday Americans in their community. And that way we're connecting the dots and taking away the fear. And it's the same formulas use for gay people back in the day.
Sarah Kate Ellis, thanks so much for stopping buy Bloomberg BusinessWeek. She's CEO and president over at GLAD