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Business News/ Companies / News/  ‘Levi Strauss allocating more dollars towards Asia in 2023’
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‘Levi Strauss allocating more dollars towards Asia in 2023’

American apparel maker Levi Strauss & Co. also firmed up a strategy to target the youth, and hired actor Deepika Padukone as the brand’s global ambassador and acquired American athleisure brand Beyond Yoga in 2021

Harmit Singh, CFO, Levi Strauss & Co (Mint)Premium
Harmit Singh, CFO, Levi Strauss & Co (Mint)

NEW DELHI : Consumer preference for casual and active wear like sweatpants during covid lockdowns had prompted clothing brands to step up efforts to align their product ranges to meet new demand. American apparel maker Levi Strauss & Co. also firmed up a strategy to target the youth, and hired actor Deepika Padukone as the brand’s global ambassador and acquired American athleisure brand Beyond Yoga in 2021. Known for its denims, the company reported $6.2 billion net revenues in 2022. In an interview, Harmit Singh, the brand’s San Francisco-based chief financial and growth officer responsible for driving corporate strategy and global retail real estate, said its flagship Levi’s operates 400 stores and is set to accelerate marketing efforts. For FY22, it had posted income of 1,153 crore in India while profit was up 41% to 50 crore. The company plans to achieve $9-10 billion in revenue by FY27, he said. Edited excerpts:

The company’s fourth quarter earnings beat street expectations. Could you elaborate on it?

Our Q4 results were at the high-end of our guidance—both revenue and profit. We grew 12% when the category grew about 1%, as reported by Euromonitor. For the fifth year in six years, we continued to grow market share. And in the last two years, our market share growth has been the highest among peers. Our Asia business, including India, grew 17% (during the three months ended 27 November); Latin America business was up double-digit. As you think about channels, we are putting a lot more effort into growing our direct-to-consumer business. What’s really driving trends these days is the looser and baggier fit. It has really taken off in time just before the pandemic. People want to dress more comfortably. With a hybrid way of working, the workplace is becoming a lot more casual.

Where does India rank? Is inflation eroding consumer demand?

We’re not seeing it. Globally consumers are aware of the price-value equation. Due to inflation we took price hikes globally in 2021 and 2022. We look at the price-value equation and we are not seeing it actually diluting even with higher pricing, which really means that the products we’re offering are hitting home in terms of trends, both with him and her. and the trend is very similar in India. As we think about 2023 there’s going to be some pricing in Asia, but very little of it in the West. In the western world, we’re seeing the value conscious consumer, really tightening their spending.

Are consumers in Asia and India more resilient to price hikes?

Our view is that consumers are a lot more resilient in the eastern part of the world. But in the West, inflation is higher than they have ever seen, besides the impact of high energy bills at home. We may witness a tale of two halves in 2023—the first half probably a little weaker than the second half; and a tale of two worlds—the West (Europe and US) showing single-digit growth while eastern world grows in high single or low double digits.

So, will the company’s focus on Asia intensify?

A large part of my job is about allocating resources (along) with the CEO, and executive team to fuel things that are driving momentum. In 2023 we are allocating a few more dollars towards Asia, such as the growing markets like India, besides Latin America. In China, it’s still a little early. Our business in China is about 3% of our total revenues, and the lockdowns there have just been lifted. We are watching if the trend sustains, and if it does, then we will allocate resources appropriately.

On ground, what does it mean for a market like India?

It basically means a couple of things: One, India is an exporter of talent, so we might invest in talent. We have taken folks overseas from India, not only in the US, but in other parts of the world: for general management, finance, merchandising, marketing and operations. In terms of investments, they will help grow our direct-to-consumer business, which is both stores and e-commerce. India is largely a franchised business, but we opened a few doors like in the Mall of India (Noida). Then for campaigns, we are in season-2 of the Deepika Padukone campaign. We had some collaborations with music-fest Lollapalooza. Levi’s is in the centre of culture, and music plays a big role. We’re looking at things like that for growth.

Will investments in India be high?

We do not give numbers by market. What I would say is that we are stepping up. Our view is India is a big market for us, we are a market leader, and we have to see how we accelerate the investments. Amisha (Jain, manning director and SVP, (South Asia-Middle East & Africa) is now on board for a couple of months, and she’s working on her strategy..

The other thing we have done is we have opened a global capability center in Bangalore. We have over 200 people largely made up of engineers, and they’re providing real expertise and enabling growth through technology—with things like AI, ensuring that we grow our direct-to-consumer business. E-commerce for us, is still a small piece (8%) of our business globally. In our investor day presentation, which was about six months ago, we talked about tripling that business over the next five-to-six years. Meanwhile, digital in India is on a high growth trajectory, and is accelerating at a 2x rate. We’ve recently launched Levi.in as part of our continued efforts to support our digital transformation efforts and deliver a more DTC-focused omni-channel experience.

Will you bring the Beyond Yoga athleisure brand to India?

The folks want it and active-wear is becoming a big play in India. So over time, yes. But right now, our job number one is to solidify the Beyond Yoga offering in the US, open our stores, get the brand awareness up and then we take it overseas

How has the fashion world changed post the pandemic?

We’ve seen cycles come and go but we continue to believe in the fact that we have grown share during the five out of the last six years. Whether it is skinny, whether it is looser-baggier fits, whether it is the rise going from low to mid to high etc., and then coming down—we kind of lead those trends. If you looked at the brand 10 years ago, we were not connecting as well with the younger consumer. We are connecting a lot stronger with the younger consumer today. In the US, our leadership position in the age group of 18 to 34—is really high. There was a time 10 years ago when we had lost a generation. Thanks to us being in the center of culture, music plays a role here, we collaborate really well with other wonderful brands and that brings in brand heat from that perspective. Plus, growing our e-commerce presence is important because that’s how the consumer today shops.

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 08 Feb 2023, 11:46 PM IST
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