A pedestrian passes by a Levi’s store in midtown Manhattan.
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The CEO of the world’s most famous denim jeans company says he knew from his second day on the job that the best way to turn his company around was to fire more than half of its executives.
“The easiest way to change a culture is to change people,” said Charles Berg, CEO of Levi Strauss & Co. “The easiest way to change a culture is to change people. Nine people are gone,” he said.
Still, Berg told CNBC’s Christine Tan that his biggest regret was not firing the wrong person sooner.
“My biggest regret is that we didn’t lean on some of these great leaders, and we lost some because I held on to someone longer than I should have.”
Berg joined the apparel retailer in 2011 at the worst possible time, when consumers stopped buying Levi’s jeans.
“The brand was really lost. There was a generation of consumers who didn’t grow up wearing Levi’s like I did when I was a kid,” Berg said.
“The company’s performance has been very erratic for more than a decade. One year, revenue rose, but profits fell. The following year, profits were revised, but revenues fell.”
Charles Berg, CEO of Levi Strauss & Co., speaks at the 2015 Fortune Global Forum in San Francisco, California, USA, on Tuesday, November 3, 2015.
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Six years later, Berg has brought what he once called a “broken” brand back into the spotlight.
In 2017, Levi’s achieved 8% annual revenue growth. Highest price in 10 years This significantly exceeded the 3.1% growth seen in the previous year.The company continued to grow as it continued to grow. 14% year-on-year revenue growth In 2018.
Berg, who will step down as CEO next year, said his biggest accomplishment was shaking the company out of its complacency and building a team that puts the brand at the center of its culture.
“I’m just an orchestra conductor and I’ve built a great team around me,” he added.
However, not everything is smooth sailing. The company significantly cut its profit outlook for 2023 after reporting a significant decline in wholesale revenue and weak sales in the United States, its largest market. This year’s sales growth rate is expected to be 1.5% to 2.5%, compared to 1.5% to 3% previously.
Like many apparel companies, Levi’s has had to adapt to changing consumer tastes, particularly the increased demand for comfortable, loose-fitting clothing as employees return to offices after the pandemic.
A guest wears a blue Levi’s denim shirt during New York Fashion Week on September 13, 2022 in New York City.
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In 2021, the company will Activewear Brand Beyond Yoga, Berg previously told CNBC that it would help grow the women’s business. At the time, she said, her goal was for women’s clothing to account for 50% of Levi’s business..
“It drives me crazy when I see women walk into our store, buy our bottoms, then leave and go to an unknown competitor’s store to buy tops. ” Berg said.
Sales of products for women 35% of net revenue In the first half of this year.
One promising area for Levi’s growth is expansion in Asia.
“We are planning to open a large store.” [and] It has a much bigger impact on consumers,” Berg said, highlighting how revenge spending from Chinese customers is a “huge opportunity” for brands.
In the second quarter, revenue from Asia increased 18% to $262 million.
A pedestrian passes by a Levi’s store in Hong Kong.
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Still, Berg said Asia accounts for less than 20% of the company’s total sales, and China accounts for less than 3%.
“Many of our competitors have more than 10% market share. Look at Nike. 40% of Nike’s market capitalization is probably in China, so we know there’s an opportunity here,” he said. ” he said.
“We are adding about 100 net doors a year worldwide, and about a third of those will be here in Asia.”