Yes, Levi Strauss & Co. (LS&CO.) has jeans, but it gets the casual workday wardrobe, inside and out. A global manufacturer of brand-name clothing, LS&CO. sells jeans and sportswear under the Levi's, Dockers, Signature by Levi Strauss, and Denizen labels in more than 110 countries. It also markets men's and women's underwear and loungewear. Levi's Red Tag jeans, department store staples and once the uniform of American youth, have expanded outside their niche to markets beyond the US. LS&CO. has further transformed its products portfolio to include wrinkle-free and stain-resistant fabrics used in making some of its Levi's and Dockers slacks. The Haas family (descendants of founder Levi Strauss) controls LS&CO.
LS&CO.'s operations are divided among three geographic regions: the Americas, Europe, and the Asia/Pacific region. While Levi's is marketed as an authentically American brand, approximately 50% of the company's net revenues come from outside the US.
Worldwide, LS&CO.'s clothing is sold in about 55,000 retail locations, of which 2,300 stores sell only the Levi's brand. Outside of the US, its lineup is found in department and specialty stores, and some 1,800 franchised and other brand-dedicated outlets.
Like many other apparel makers, which have traditionally relied on chain retailers and department stores to distribute their products in the US, LS&CO. is developing its own retail network to increase the global availability and visibility of the Levi's brand. LS&CO. distributes Levi's and Dockers clothing through approximately 500 company-operated stores in 32 countries, as well as sells apparel online. Company-operated stores have generated an increasing share of sales, 18%, 15%, and 11% in 2011, 2010, and 2009, respectively. LS&CO. added 62 company-operated stores and closed 34 during 2011.
In fiscal 2011 (ends November) LS&CO. hit a five-year low, posting an 8% decline in earnings over the prior year. Sales climbed 6% over 2010, driven by the company's expanding retail network across all geographic regions. The top line was underpinned by the Levi's brand products, which accounted for 83% of sales in 2011 while Dockers-branded products represented only 12%, slipping from 21% in 2007. In addition, although LS&CO. boasts a broad range of apparel, its jeans, and casual and dress pants, account for more than 80% of all sales (2009 through 2011). Men's products generated more than 70% of sales during the same period.
Part of the struggle toward growth is attributable to higher costs, as well as growing competitive pressures. LS&CO has lost market share to rival V.F. Corporation (maker of Lee and Wrangler brand jeans and apparel) and others over the past decade. It is further squeezed between makers of pricey, premium denim (True Religion, Diesel S.p.A.) and purveyors of trendy, low-priced denim (Wal-Mart and J.C. Penney).
In addition to opening company-owned stores, the jeans maker created the Signature by Levi Strauss and Denizen brands, sold through the mass market. In 2011 the Denizen entered more than 1,700 Target stores in the US. Abroad, the brand has developed a following in China and India. Results to date, however, are modest. Demand for the company's value-priced brands has remained flat, accounting for roughly 5% of sales.
LS&CO. simultaneously is aiming to take advantage of its category and brand strength. In its first-ever global product launch, it introduced Levi's Curve ID jeans for women, which is reportedly selling ahead of the brand's overall growth. It also developed the Water<Less jeans; targeting eco-conscious consumers, the jeans use up to 96% less water in the washer's finishing process than traditional jeans.
The company is also looking for a boost from developing markets. Licensing deals have opened the door. LS&CO. has entered into regional licensing agreements with a number of manufacturers to produce, market, and distribute its products in Latin America, the Middle East, and the Asia/Pacific region. – less