The CEO of Levi’s Strauss on Turning Around a Famous Denim Jeans Company
The CEO of the world’s most famous denim jeans company said he knew from his second day on the job that the best way to turn around the company was to fire more than half of his executives.
Charles Bergh, CEO of Levi’s Strauss, stated, “The easiest way to change the culture is to change the people. I had 11 direct reports, and in the first 18 months, nine of them were gone.”
However, Bergh admitted that his biggest regret was not firing the wrong people fast enough. He said, “My biggest regret is that we didn’t lean into some of these great leaders, and we lost some because I held on to somebody longer than I should have.”
Bergh’s Challenge in Reviving the Brand
Bergh joined Levi’s in 2011 when the company was struggling due to a decline in consumer interest in their jeans. He explained, “The brand was really lost. We had a whole generation of consumers that didn’t grow up wearing Levi’s like I did when I was a kid.”
The company’s performance had been inconsistent for over a decade, with fluctuating revenues and profits. Bergh faced the challenge of stabilizing the company’s financials.
Successful Turnaround and Legacy
Six years later, Bergh successfully transformed the once “broken” brand. Levi’s achieved 8% annual revenue growth in 2017, the highest in a decade, and continued the momentum with a 14% year-on-year revenue growth in 2018.
Bergh, who will be stepping down as CEO next year, considers his biggest accomplishments to be shaking the company out of complacency and building a team with the brand at the center of culture. He humbly added, “I am just the orchestra conductor and have built an amazing team around me.”
Challenges Ahead and Expansion in Asia
Despite the successful turnaround, Levi’s faces challenges in the form of declining wholesale revenue and soft sales in the U.S., its largest market. The company has adjusted its profit outlook for 2023.
Levi’s has also recognized the need to adapt to changing consumer preferences, particularly the growing demand for comfortable and looser fit garments as people return to offices after the pandemic.
Focus on Women’s Business and Asia Market
In 2021, Levi’s acquired activewear brand Beyond Yoga to help grow its women’s business. The company aims to make women’s wear account for 50% of its business, as currently, it contributes 35% of net revenue.
Levi’s is also expanding its footprint in Asia, with a focus on China. Bergh sees an opportunity in the revenge spending trend among Chinese customers and plans to open more stores in the region.
