Levi's CEO says goal of $9 billion to $10 billion in annual revenue by 2027 will be pushed back

By Ciara Linnane

Denim-clothing company says its customer is still holding off on spending

Levi Strauss & Co.'s goal of generating $9 billion to $10 billion in annual revenue by 2027 will be pushed back as the denim clothing company is still seeing pressure on its customers after a long inflationary period, new Chief Executive Michelle Gass told the Financial Times.

Gass, who joined the company last year as CEO-designate before taking on the top job earlier this year, said the iconic company would "do our homework again" before offering investors a new timeline as "there has been a lot of disruption in the industry" since the company first outlined its goals.

Levi (LEVI) posted revenue of $6.2 billion for the year to Nov. 26, 2023, as net income fell to $250 million from $569 million the year earlier.

The company's finance head Harmit Singh said the revenue target would likely be revealed about a year from now and the original goal would be pushed out a couple of years.

Like many consumer companies, Levi is struggling as consumers, especially in the Western world, hold off on spending on non-essentials. While U.S. consumers were "in a better place" than earlier this year - particularly Levi's core customer, who earns more than $100K a year - lower-income customers are still feeling the pinch, said Singh.

"The consumer in Europe is probably a little bit more cautious," he said, while Asia and Latin America were generally fine.

Gass is speeding up Levi's plan to sell more of its products through its own stores, expand to dresses and jumpsuits for women and add non-denim products.

The executive came to the role after stints at Kohl's Corp. and Starbucks, where she helped the coffee-shop chain expand overseas.

Her priority was to "really rewire the entire business to now be a best inclass, direct to consumer retailer" after predominantly selling through wholesalers for decades, she told the FT.

Levi has about 1,200 stores and about the same number of franchise outlets and is planning to open 500 to 600 more stores in Asia, Latin America and Europe in the next few years.

Gass is also planning to increase the company's market share with women, who account for about a third of sales.

"Yes, women like to wear jeans, but they like to wear skirts, dresses. And assomeone who wears these things, I was like, 'where are these skirts?' when I joined, and now you can find a lot more - we are just scratching the surface," she said.

Levi's was founded in 1853 when Bavarian immigrant Levi Strauss opened a dry goods company in San Francisco and worked with tailor Jacob Davis to create the product that became blue jeans.

Since then, Levi's jeans have become a fashion icon, featuring on the cover of Bruce Springsteen's Born in the USA album in 1984.

Singer Beyoncé named a song after the brand on her album this year.

Levi's stock was up 1.2% Tuesday and has gained 24.9% in the year to date, while the S&P 500 has gained 19.9%.

-Ciara Linnane

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09-24-24 1109ET

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