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