Levi’s Works to Remake Its Image
It wouldn’t be totally unfair to compare Levi Strauss’ business in recent
years to some of its more worn and weathered jeans. Now, the company is trying
to go upscale (again) and banking that it will achieve success that has eluded
it in the past with items such as $198 jeans.
As a Wall Street Journal article points out, Levi’s has taken a number
of steps to make its brands more attractive to the beautiful people including
the opening of "lavish boutiques," renaming high-end labels, and
hiring executives from designers including Ralph Lauren and 7 for All Mankind.
While its more expensive denim items are a small part of the business, the
company believes that establishing credibility at the high-end will have a
positive effect on the rest.
So far, results seem to indicate the company is on to something, with earnings
for the most recent quarter up 17 percent from the same period the year before.
It has also posted positive numbers because of its response to past problems
earlier in the decade. The company hired Alvarez & Marsal in 2003 to help
get itself turned around. With much of its work done prior to the Great Recession,
the company was in much better shape than many others when consumer spending
Jeff Feinberg, managing director at Alvarez & Marsal, told the Journal, "The
people who were running the company were prepared for it — they had been
through the wringer already."
Going into the downturn, Levi’s began spending money and expanding while others
were cutting back. The company opened 154 stores last year on top of 60 in
"It was our intent going into the recession that we would be able to
attack coming out of the recession," said Robert Hanson, president of
Levi’s Americas division.
Discussion Questions: Is Levi Strauss on the path
to greater success? Where do you see the greatest opportunities and challenges
for the company and its brands now and in the near future? Is its store and
e-commerce strategy on the mark?