Stop washing your jeans. That’s not my suggestion, but one from Levi Strauss & Co CEO Chip Bergh. Reader, I can hear you.
You’re thinking "eww".
Bear with me. Spot cleaning is apparently the way to go if you want to maintain its design and prevent dullness. And for heaven’s sake, whatever you do, don’t put your jeans into a washing machine.
"Worst-case I hand wash them. And I do it myself," Bergh said last week on the New York Stock Exchange (NYSE) trading floor. For the second time in its 165-year history, the denim brand has gone public. In the past decade it has experienced a resurgence of sorts — Levi’s has become cool again. Last Thursday its shares opened at $22.20, giving the company a market value of $8.6bn. It closed its first day at $22.41 — 32% higher than its IPO price. It was only the second time traders had ever been given permission to wear denim on the NYSE floor. The first was in 2009, when they were outfitted in Gap jeans to commemorate the brand’s 40th anniversary.
Bergh joined Levi’s in 2011 after nearly three decades at Procter & Gamble, at a time when the maker of 501s had lost its way. He’s credited with doing all the right things: restoring R&D, consolidating supply chains, cutting costs and introducing modern offerings — jeans with stretch in the era of athleisure (where people wear clothing designed for workouts in other settings. Now that’s "eww").
Levi’s raked in a net profit of $285m in 2018. Some money raised from the flotation will be used to expand into emerging markets.
Selling more jeans to women will be key to future growth, Levi’s says.
Fun fact: most of its jeans are bought by men — last year its men’s business accounted for $4bn of the company’s $5.6bn revenue. Levi’s also wants to continue broadening its clothing range. It’s been expanding in tops, which last year accounted for 20% of sales. It is hoped that the Levi’s IPO will kick-start a strong series of flotations. According to Bloomberg data, more than 300 companies are planning to list in the US — among them Uber and its smaller rival, Lyft. What with general market volatility and the federal government shutdown (which put the brakes on many IPOs), last year was a disaster for new offerings. Goldman Sachs predicts that the overall amount of money raised through listings could hit a record $80bn in 2019.
Built to last
Levi Strauss, who immigrated to the US from Bavaria, moved to San Francisco in 1853 during the California gold rush, opening a dry goods business. About 20 years later he patented the use of copper rivets in clothing, which made items like waist overalls and pants more durable — perfect for cowboys, miners and railroad workers. He died childless in 1902, leaving his company to his nephews.
Levi’s had gone public once before, in 1971. The Haas family, descendants of founder Levi Strauss, took it public in 1985 in a $1.7bn leveraged buyout. When Bergh arrived at Levi’s, the company was spending more on interest payments than on advertising. Over the past two years, Levi’s has cut its debt load in half. And though the company still makes most of its revenue through wholesale channels like department stores, one-third of its business now comes from selling direct to consumers. I think there might be something philosophical in the comeback of a legacy brand that essentially sells resilience.
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