She turned the Frappuccino into a hit at Starbucks. At Kohl’s, she wooed the beauty chain Sephora to spruce up the department stores, but then battled with activist investors, who called for her removal as chief executive.
Now, Michelle Gass is taking on her “dream job,” as CEO of Levi Strauss, the 171-year-old denim maker that has given us 501 jeans, the trucker jacket and other wardrobe staples. It’s another chance for Gass to showcase what she calls “no regret” moves—or small, low-risk bets that add up to big changes.
She’s got a tough act to follow. Her predecessor, Chip Bergh, brought Levi Strauss back from the cultural graveyard to make it cool again. He also restored it to financial health, culminating in a 2019 stock offering that returned the San Francisco company to public markets after more than three decades as a private enterprise.
Gass needs to figure out how to keep the growth going, as consumers pull back on spending, particularly price-sensitive shoppers who tend to frequent department and discount stores, where Levi Strauss sells a lot of its products. It cut prices in those channels on some items last year, which helped to jump start demand.
On Thursday, the company said it would reduce its workforce by 10% to 15%, part of a restructuring that will save $100 million this year. Sales in the most recent quarter rose 3% compared with a year earlier, boosted by a return to growth in the Americas.
She is taking the helm at a time when female CEOs are losing ground. Of the 47 new retail chiefs in 2023, only five were women, according to a study by executive search firm Korn Ferry, which examined public and private companies with revenues of at least $100 million. A dozen outgoing female retail CEOs were replaced by men. The tenure of female retail CEOs is about half of their male counterparts, the study found.
Gass said one way to boost the number of female CEOs is for sitting chiefs to mentor younger executives. She credits a lot of her early success to Deidra Wager, who was a Starbucks executive when Gass was starting out. Gass is returning the favor by mentoring an executive in an unofficial capacity at a large food and beverage company.
Lessons learned
Gass studied chemical engineering at Worcester Polytechnic Institute in Massachusetts, where she learned problem-solving skills, and got her M.B.A. at the University of Washington. In 1990, she joined Procter & Gamble, which gave her a deep dive in brand building.
She jumped to Starbucks in 1995 and spent more than 17 years there. Her first job at the coffee chain was manager of the Frappuccino brand. At the time, the drink was a tiny part of Starbucks business, not the blockbuster it is today. She grew it exponentially by adding new flavors and toppings like caramel and whipped cream. “We moved it from a way to have coffee to a permissible adult treat,” Gass said.
One of the lessons she learned at Starbucks is that customers don’t always know what they want. When Starbucks was developing the pumpkin spice latte in 2003, the drink initially tested poorly with consumers. Gass decided to launch it anyway, convinced it would catch on. Today, the drink is Starbucks’ most popular seasonal beverage.
She joined Kohl’s in 2013 as chief customer officer and worked her way up to CEO five years later. In 2020, she reached out to Sephora, which had a longstanding contract to operate shops in JCPenney stores. Penney had filed for bankruptcy protection, and Gass saw a chance to woo the beauty chain away from one of her company’s chief rivals.
That spring, during the height of the Covid pandemic, Gass met by conference call with executives from Sephora and its parent LVMH Moët Hennessy Louis Vuitton and made her sales pitch: putting Sephora into Kohl’s nearly 1,200 stores and giving the brand access to its roughly 65 million customers.
Gass said she was personally involved in the minutiae of the deal, down to the lights and display cases that would showcase Sephora products.
“Jean-André Rougeot could pick up the phone and call or text me anytime,” she said of Sephora’s head of the Americas. “I was all in and that was really important to him.” Rougeot said she had “laser focus” on building the partnership.
Today, Sephora has shops in more than 900 Kohl’s stores.
“That transaction would never have happened without her,” said Kohl’s Chairman Peter Boneparth. “It’s her legacy and one of the most important ways we are transforming Kohl’s.”
Gass also struck a partnership that lets shoppers return purchases made at Amazon to Kohl’s stores. She refreshed its merchandise with new brands such as Under Armour and Tommy Hilfiger. And she more than doubled the company’s ecomerce business.
The moves weren’t enough to jump-start sales or boost Kohl’s stock price. Before long, activist investors were pushing to replace directors and oust Gass as CEO.
Amid the activist battle, the board struck a deal to sell Kohl’s to the owner of the Vitamin Shoppe, but it collapsed amid rising interest rates and an uncertain economic environment.
Kohl’s board stood firmly behind Gass, but the activists took a toll on her, say people who know her. She says the experience made her stronger.
New opportunity
During a business lunch with Bergh in October 2022 at Spruce restaurant in San Francisco — Levi’s is one of Kohl’s top brands—Bergh asked if she might want to succeed him as CEO.
She jumped at the chance, leaving Kohl’s in December 2022 and joining Levi Strauss a month later as president, with oversight of global digital and commercial operations as well as the Levi’s brand. The company also owns Dockers and Beyond Yoga. The expectation was for her to succeed Bergh as CEO within 18 months.
She spent the past year touring Levi Strauss stores and distribution centers around the world, including India, Shanghai and Tokyo, which she says are fertile ground for expansion.
Now that she is poised to become CEO on Jan. 29, the pressure is on.
“Her tenure at Kohl’s was mixed,” said Neil Saunders, managing director of research firm GlobalData. “She needs a lot of wins at Levi Strauss if she is going to clean up her record.”
Gass says she left Kohl’s in better shape than when she arrived. At Levi Srauss, she wants to lessen the company’s dependence on department stores and sell more goods through its boutiques, which include more than 3,000 directly owned and franchised locations worldwide.
To do that, she says she needs to rewire the company to make it act more like a retailer instead of a wholesaler. That entails speeding up product development cycles, improving store merchandising by adding more mannequins and generally being more nimble.
“As a retailer, I can say, ‘Denim skirts are selling like crazy, let’s move them to the front of the store,’” Gass said. “As a wholesaler, you don’t get to make that call.”
Levi Strauss reported a 3% increase in sales to $1.64 billion for the three months to Nov. 26, compared with $1.59 billion a year earlier. Wholesale revenue fell 2%, but sales at its own stores rose 11%. Net income declined to $126.8 million from $150.6 million a year ago. The stock is down about 4.5% over the past year.
Gass also wants Levi Strauss to be a destination for more than just jeans and to be known for all things denim, from dresses to skirts and jackets. In this case, she has luck on her side. The head-to-toe denim look—also known as the Canadian tuxedo—is back in fashion. Rihanna was among the celebrities who walked the red carpet recently in denim ensembles, when she appeared last year at CinemaCon in an oversized denim cape dress and matching pants.
Today, CEOs are measured by more than just the company’s stock price. Bergh thrust Levi Strauss into the political spotlight by taking stands on controversial issues. Gass said she plans to follow his lead by advocating for issues that are important to employees such as LGBTQ equality, reproductive rights and preventing gun violence.
“Levi Strauss is incredibly principled on what it stands for,” said Troy Alstead, a Levi Strauss director, who worked with Gass at Starbucks. “Michelle has the ability to embrace that, but she will do it in her own way.”
Gass starts her day at 4:30 a.m. with an Americano coffee and does some work in the quiet predawn hours. She saves the grande extra-hot almond-milk latte for later, ordering it from the Starbucks near her office. “They know me by name,” she said of the Starbucks employees.
She runs or does yoga before heading to the office around 9 a.m. She tries to make it home in time to have dinner with her husband Scott, who early in their 30-year-marriage gave up his sales career to take care of their two children.
“I love to work,” Gass said. “It doesn’t feel like work.”
Write to Suzanne Kapner at suzanne.kapner@wsj.com