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