Fourth Quarter 2018 Highlights

According to the results reported, the net revenues of Levis grew by 9 percent however the net income declined by 17% ($97 million) in the 4th quarter primarily due to a tax charge related to the impact of the Tax Cuts and Jobs Act (the “Tax Act”). While analyzing the fiscal year results, we learnt that Net Income has no change however Net revenues grew by 14%.

“We had an outstanding year with reported net revenues of $5.6 billion, growing 14 percent year-over-year on a reported basis,” said Chip Bergh, president and chief executive officer of Levi Strauss & Co. “It’s clear our strategies to diversify our product portfolio, expand our direct-to-consumer business, and deepen our connection with consumers worldwide have worked, resulting in both higher annual revenues and gross margins.”

Regional Overview

Reported regional net revenues for the quarter were as follows:

• In the Americas, net revenues grew 8 percent in the 4th quarter and on an annual basis, it has witnessed a growth of 10 percent reflecting continued growth in the wholesale channel driven by Signature and Levi’s brands, and the strong performance of the company-operated retail network.
• In Europe, net revenues grew 13 percent in the 4th quarter and annually the revenue has registered a growth of 25 percent, which enabled the company to reach the revenue level of more than $1500 million. The total net revenue of Levis by the end of November 2018 was $1646 million.
• In Asia, quarterly revenue growth was reported at 5 percent however the annual growth was 8 percent.

REVENUE

Reported regional Operating Income for the quarter was as follows:

• In the Americas, operating income has no change in the 4th quarter and on an annual basis, it has witnessed a growth of 4 percent.
• In Europe, operating income grew 26 percent in the 4th quarter and annually the revenue has registered a growth of 47 percent, which enabled the company to reach to the income level of more than $250 million. The total operating income of Levis by the end of November 2018 was $293 million.
• In Asia, quarterly revenue growth was declined by 32 percent however the annual revenue growth was 11 percent.

INCOME

America is still the favorite location for Levis hoHowever we see from the growth point, Europe has delivered far better than America. Against the 0% change in the operating income in America, Europe has a 26% growth on a quarterly basis and 47% growth on an annual basis as against the 4% of America’s Operating Income growth.

In 2018, MORNING CONSULT conducted a survey and they came out with the following result which says:

“Levi Strauss & Co., one of the oldest companies Morning Consult tracks in its Most Loved Brands list, leads all U.S. denim brands with a net favorability ranking of 72. That’s at least 20 percent higher than the net favorability of VF Corp.’s Lee and Wrangler brands and nearly double the average of Levi’s top seven tracked competitors.”

Many reports suggested that Levis is poised for a comeback and the growth of 9% connotes the same. However apart from America, the company must expedite its expansion drive into Europe and Asia also where its competing companies like Zara, H&M, Wrangler, Gap and Pepe Jeans have been expanding rapidly.

Levi Strauss & Co. introduces Project F.L.X. (future-led execution), a new operating model that brings denim finishing into the digital era. By digitizing denim finish design and development, the company is enabling a more responsive and sustainable supply chain at an unparalleled scale. Project F.L.X. radically reduces time to market and eliminates thousands of chemical formulations from jeans finishing. Through Project F.L.X., the company is claiming is that they are achieving the ultimate balance of agility and sustainability, while upholding their standards of craftsmanship, quality and authenticity. LS&Co. has begun piloting Project F.L.X. with select vendors and retail partners and will roll it out across its supply chain in a phased approach over the next two years. The rollout of this new digital platform will be phased over time, with a goal of being fully scaled in 2020.

HOW ITS STARTED

Project F.L.X. was built in-house at LS&Co.’s Eureka Innovation Lab by a team of designers, developers, chemists and engineers passionate about revolutionizing the apparel industry to better meet consumer needs while also doing right by the planet and the people who work in the apparel supply chain. A number of LS&Co. team members were retrained and reskilled in software development and laser operations. Retraining will be a key tenet as this new model rolls out globally. To help unlock the benefits of more sophisticated laser technology, LS&Co. turned to long-standing partner Jeanologia, a leader in eco-efficient solutions for fabric and garment finishing. Since 1993, Jeanologia operated with the ambition of advancing sustainable apparel manufacturing by delivering disruptive technologies, including ozone, laser and e-flow finishing systems. The company’s like-minded focus on scalability was essential to supporting LS&Co.’s end-to-end, transformative vision.

“We believe it is possible to be both agile and sustainable without compromising the authenticity our consumers expect from us,” said Chip Bergh, president and CEO of Levi Strauss & Co.

Four Major Developments Under Project F.L.X. :

1. Replace manual techniques and automate the time-consuming, labor-intensive and chemical-reliant process of hand-finishing: For more than 30 years, the apparel industry has used hand-finishing to accentuate worn, faded design elements on denim. By using lasers in new ways, finishing time is cut dramatically – from two to three pairs per hour to 90 seconds per garment, followed by a final wash cycle.

2. Create “photo-real” finished garments digitally: By digitizing the finish design and development process, LS&Co. designers can now create finishes and final garments with a revolutionary new imaging tool. Built by LS&Co., this advanced imaging capability cuts finishing design and development time in half (from months to weeks and sometimes days) and is so accurate the digital files can be sent directly to the vendor and quickly scaled to mass manufacturing.

3. Take advantage of on-demand and even hyper-local production capabilities: By delaying decisions on final products until much later in the process, LS&Co. can radically reduce its lead times from more than six months to as fast as weeks or days in some cases. This is made possible by staging garments that await their on-demand finish order closer to the market.

4. Eliminate thousands of chemical formulations from its supply chain: LS&Co. plans to reduce the total number of chemical formulations used in its finishing process from thousands to a few dozen. This is a major step forward in the company’s commitment to achieving zero discharge of hazardous chemicals by 2020 and furthers its goal of pioneering more sustainable apparel.

“With this new model, we can deliver the authentic and iconic products we’re known for in an incredibly responsive and responsible way,” said Liz O’Neill, senior vice president and chief supply chain officer for Levi Strauss & Co. “The advanced imaging capability is a game-changer for us, and something that has eluded our industry for years.”

“One of the biggest challenges we face as an industry is ensuring we have the right products at the right time as well as the ability to respond to our customers’ evolving needs with speed,” said Paige Thomas, Executive Vice President and General Merchandise Manager for Men’s and Kid’s at Nordstrom Inc. “The team at Levi’s is working towards this challenge by contributing to the future of the apparel industry as one that’s both agile and uncompromising on quality, while improving sustainability. We’re excited to be part of it.”

When we quickly compare the G-Star RFTPi jeans and the Levi’s F.L.X jeans, we find that there are differences among them in terms of scope of sustainability. While the G-Star jeans covers even the cotton aspect and the dyeing of the fabric and even covering the accessories, Levi’s jeans gets its sustainability score from the processes used in jeans finishing where they use the modern laser and other methods to achieve zero chemical and very less water usage . But our vote would go to G-Star as their scope seems wider and they have tried to cover the major inputs into the jeans rather than only covering the jeans finishing part.

https://www.youtube.com/watch?v=SMDlbNpE6dU

Analysis Of Financials

The net revenue for the Year ended on November,2017 for the Americas, Europe and Asia has been $2,774 , $1,312 and $818 millions respectively . Europe region has evolved as the leader in terms of revenue growth with 20% surge in a year. In the year 2016 , the net revenue for Europe region was $1,091 million which increased by $221 million in the year 2017 . The rest – Americas and Asia experienced a marginal growth of 3% and 5% respectively when seen annually. Europe , however, gained a very decent sales of over 20% over 2016.

Net Revenues For Year Ended Nov. 2017 Vs Nov. 2016 ( In $ Millions)

The 4th quarter was particularly good for Levis. European market grew 28% over the same quarter Asia posted an uptick of 13% in terms of revenue growth. The market of America isn’t too responsive and there are reasons behind it. Asian and European growth is on right track and will continue to grow in coming years. In the same quarter of 2016 , Americas contributed 62% in total net revenue which has been decreased by 4% in this quarter .

Net Revenues For Year Three Months Ended Nov 2017 Vs Nov2016 ( In $ Millions)

(source : Bloomberg)

Women Leading The Growth

Levi’s is experiencing a straight 10th quarter growth in women denim sales. This is a very good sign specially seen in context of ‘Athleisure’ trend chipping off the sails of many a retailer. However, Levi’s was wise enough not to board the ‘Athleisure’ bandwagon and focused on what they did best. Only they mae their denim products more adaptable , more flexible , more stretch for the new demands from the consumers. The growth for Levi’s seems to be hinged on two main terms : ‘Women’ and ‘ Overseas’ .

Chip Bergh, CEO , was expectedly ecstatic and said.

“Our growth and momentum accelerated in the fourth quarter, capping the strongest revenue year the company has had in more than a decade,” chief executive and president Chip Bergh said. “Our strategies are working and the investments that we’ve made to diversify our business over the past few years are paying off, best demonstrated by the strength of the Levi’s brand globally.”

]]> https://www.denimsandjeans.com/brands/denim-brands-international/levis-posts-highest-growth-decade/31677/feed 0 https://www.denimsandjeans.com/denim-fabric-developments/google-and-levis-present-the-first-smart-jeans-for-urban-cyclists-project-jacquard/20978 https://www.denimsandjeans.com/denim-fabric-developments/google-and-levis-present-the-first-smart-jeans-for-urban-cyclists-project-jacquard/20978#respond Sat, 28 May 2016 12:41:51 +0000 http://www.denimsandjeans.com/?p=20978

Continuing our previous report on Project Jacquard by Google and Levis , its heartening to know that Levi’s is taking its collaboration with Google ATAP to the next level by introducing a commuter denim jacket. The collaboration, which comes under Project Jacquard, works toward establishing a new, scalable system which weaves technology components into standard fabrics and textiles.

The jacket was announced on 20th May, 2016 at Google I/O, the result of a year-long effort between the Levi’s® Innovation team and Google’s Advanced Technology and Projects (ATAP) group under the banner of Project Jacquard.

The discreetly placed Jacquard technology is literally woven into the jacket, allowing for simple gestures like tapping or swiping on a sleeve to activate functionality. Of course you can wash it, just like you do with any other jacket. This perfect pairing showcases the knowledge and know-how of Google ATAP’s Jacquard team with the performance power of the Levi’s® Commuter line, which is designed to perform as great as it looks. The Jacquard team then adds a smart tag — which looks like a normal jean jacket button — to provide feedback to the user. The smart tag would be the equivalent to a smart watch; it’s packed with LEDs and haptic sensors to alert of phone notifications and such. Levi’s mainly advertised the jacket for urban bike commuters, but it seems ideal for anyone, since it looks like any other Levi’s Commuter jacket.

“Anyone on a bike knows that navigating your screen while navigating busy city streets isn’t easy – or a particularly good idea,” said Paul Dillinger, head of global product innovation for Levi Strauss & Co. “This jacket helps to resolve that real-world challenge by becoming the co-pilot for your life, on and off your bike.”

During last year’s Google I/O conference, the Levi’s brand became Google ATAP’s first partner on Project Jacquard, which credited the brand for being authentic, innovative and fashionable.

Our innovation story began with the invention of the blue jean, which turns 143 years old today, but that was merely the first chapter. From the debut of the first jeans for women in 1934 to the revolutionary work that goes on in our Eureka Innovation Lab today, Levi Strauss & Co. brands are constantly innovating to solve the needs of our consumers.

The Levi’s^® Commuterâ„¢ Trucker jacket is expected to be available beginning spring 2017 in select Levi’s® stores and on Levi.com.

Levi Strauss & Co.partnered this year to create the first pair of jeans made entirely from post-consumer cotton waste. Discarded consumer waste is converted into renewable fiber after using a new ,patent-pending recycling technology . The first prototype, in the form of a pair of iconic Levi’s® 511® jeans, represents a future where textile waste is reduced considerably and cotton garments are continually regenerated to create a more sustainable world.

Believing the figures, United States alone creates an average of 13.1 million tons of textile wastes and out of which 11 million tons ends up in landfills. According to the Council for Textile Recycling, the U.S. generates an average of 25 billion pounds of textiles per year, or 82 pounds per person. Eighty-five percent (21 billion pounds), or 70 pounds per person, ends up in landfills — accounting for 5 percent of all landfill space.Till now , there is no effective technology which could transform old apparels into new without telling upon the quality or strength. However with EVRNU technology, discarded cotton clothing can be turned into a new cotton-like fiber, creating new possibilities. This emerging technology doesn’t only act as a game changer for the Textile Industry but also help the industry to meet the increasing need for textiles and reduce both waste and water consumption.

Approximately five discarded cotton T-shirts have been used to develop the first prototype Levi’s jean and surprisingly 98 percent less water has been used than virgin cotton products while developing this innovation. Both companies are associated with a vision to create a circular economy that enhances the life of cotton and eliminates waste by infusing new life into used clothing. The partnership could help this technology scale up quickly and begin to make a significant impact.

Evrnu takes cotton garment waste, purifies it and breaks it down into a pulp. The organization then extrudes this pulp into a pristine new fiber that is finer than silk and stronger than cotton — made entirely of garment waste. Each tone of fabric (Jeans and T-shirts) consumes approximately 200 tons of water , however only two percent of water will used in the original garment process.

“We can take your old jeans, break them down to the molecular level, and build them back up into beautiful sweaters that feel good and hold color beautifully and When you are done with that sweater and it’s been reused and recycled, we can break it down again and convert it back into premium jeans.” quoted the officials of company.

By the end of 2025 , the experts predicted the volume of apparel industry to be doubled and the current rate of resource extraction can’t meet this demand. Considering it , there is an enormous opportunity for emerging technology that efficiently as well as effectively manages resources. The process as given by the company can be seen in the image below :

]]> https://www.denimsandjeans.com/denim-fabric-developments/levis-in-an-association-with-evrnu-launches-100-post-consumer-recycled-cotton-jean/20839/feed 0 https://www.denimsandjeans.com/brands/denim-brands-indian/levis-india-changes-marketing-and-pricing-strategies/172 https://www.denimsandjeans.com/brands/denim-brands-indian/levis-india-changes-marketing-and-pricing-strategies/172#comments Tue, 25 Dec 2007 05:27:41 +0000 http://denimiscool.wordpress.com/2007/12/25/levis-india-changes-marketing-and-pricing-strategies/ [ad#for-post-top]
Levi’s India is changing the marketing strategies for its Denims and Non-Denim brands. On the one hand it is seeking to expand its presence in the Premium and Super-Premium segment by launching more products in this segment. On the other hand, it is seeking to strengthen its Value Brand – Signature. Launched last year and priced between Rs 599-Rs999(USD 15- USD 25) in small towns and upto Rs 1399(USD 35) in larger towns,Signature seeks to capture a large share of the Value segment of Branded Jeans – which is currently estimated at about 10 million units – by having more than 5000 sale points for the same throughout India (as against 1000 currently).

In the Premium segment the prices are in the range of Rs 2000-4000(USD 50-USD75), Super premium has price range of Rs 4000-6000(USD 75-100) and Connosieur segment is Rs 6000-12000(USD 150-300). Levi’s wants to increase its presence in these segments. It however does not want to be present in the Mid Price Segment ie Rs 1000-2000(USD 25-50) .Thus Levi’s India is following the International trends where Value and Premium segments are expected to do better than the mid priced segments. The Value offering of Signature is Levis’ take on the local Indian brands who are selling decent jeans in the range of Rs 600-Rs1200/ – but who do not have the brand value of Levi’s.
The estimates for the market of Premium and Super Premium denim in India are about 7 million and 3 million (though I need to verify the same) and offer substantial possibilities for growth for brands like Levi’s.However, the going will not be as smooth since Levi’s will not be able to offer great washes in its Signature line – and washes are one of the biggest factor for purchase of Jeans by the young.