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Levi Struass& Co aims to rule the fashion market with new growth strategies

 

Levi Struass Co aims to rule the fashion market with new growth strategies

 

 

Not satisfied with being known as one of the world’s most popular jeans brand, Levi Strauss & Co, aims to grow into an international conglomerate with a wide portfolio of brands and multiple stores with a strong presence in categories beyond denim,including tops and womenswear. The company aims to boost sales to $10 billion by 2027 from $5.8 billion in this fiscal year.

For this, it aims to target growth of Levi’s, Dockers brands and activewear label Beyond Yoga that was acquired last August for $400 million. And as per Harmit Singh, Chief Financial Officer theyalsoplan to foray into new market by acquiring brands. The recent acquisition of Beyond Yoga would add over $100 million to revenues in 2022, he adds.

The company will target potential upmarket retailers like Ulla Johnson, Veronica Beant or Artiiza to gain a greater access to richer consumers or direct-to-consumers brands like Buck Mason or Marine Layer says Janet Kloppenburg, Founder, JJK Research

Consolidating market position

Struggling to maintain its position 11 years ago, Levi’s achieved a turnaround under the leadership of Chip Bergh, CEO, who joined Levi’s 11 years ago. Under Bergh leadership Levi’s resetthe women’s collection, increasing its contribution to 33 per cent of the company’s overall sales last year. The company has grown at an average rate of 6 per cent annually since 2015.

Levi’s has consolidated its presence in the market by adopting strategic marketing campaigns, a revamped wholesale strategy that favors more upscale stockists including Ssense and Shopbop, and collaborations with brands like MiuMiu. It revamped the staple 501 jeans and added a luxury feel to it, adds Kloppenburg.

Besides, Levi’s also remained more affordable compared to the designer brands it was now stocked alongside. This allowed the brand to grab market share from both high-end and mass rivals.

Growth plans

In the next five years, Levi’s plans to increase sales by 6 to 8 percent annually. It also aims to increase its adjusted EBIT (earnings before interest and taxes) margin to 15 percent in 2027, from 12.4 percent in 2021. Of the projected $10 billion in revenue in 2027, $1 billion is expected to be generated by Dockers and Beyond Yoga.

Levi’s will drive this growth by strengthening its direct-to-consumer channel, which includes e-commerce and 3,000 standalone stores across the world. Currently, DTC accounts for 36 percent of all revenue. By 2027, the company expects that share to reach 55 percent, partly thanks to 400 new locations, mostly smaller-format, “NextGen” stores. About 100 of these stores will be in the US. Even so, Levi’s will continue to work with select multi-brand retailers and department stores, adds Berg

Differentiation strategies

Levi’s will also maintain growth by differentiating assortment through M&A or bolstering apparel categories outside denim and penetrating new markets. In terms of M&A, the company is focused on four categories: tops, womenswear, outerwear and footwear.It also plans to grow its women’s business on par with men’s, Berg says.

 
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