COMPANY INFO:
- Brief company history
Levi Strauss started out as one of the people who found gold in the hills of California during the Gold Rush Days. He did not do it as a gold miner. The man called Levi Strauss started out with that dream, but his EURIKA moment came when he discovered that he could garner more gold from the miners by providing tough durable clothing then he could by going into the hills and searching. He did it the old fashioned American way. He had other people bring it to him. For the last century and a half they have been doing just that. Levi Strauss was founded in 1853, incorporated in 1971: it is still primarily owned by the descendants of Levi Strauss. .
- Business sector/market
Levi Strauss Company has found revitalized success every year since because the founder found a need and fulfilled it with a tough durable product that does, none the less, wear out and need to be replaced from time to time. Now however, although they operate their own retail physical and virtual Company Stores they also have a vital presence in the wholesale market. Selling to retailers like J.C. Penny and Walmart. Although it is incorporated Levi Strauss & Co. is not publicly traded on the United States Stock Exchange. It is on the Fortune 500 list along with Nike and other companies it works with. .
- Primary products/services
Levi Strauss still makes blue jeans, and work clothes are still an important part of their clothing line. As blue jeans made their way into mainstream acceptance in the 1970s they carried Levi along with them. When jeans became a fashion statement in the 1980s they were right there. As each successive generation matures they discover Levis. There is probably not a wardrobe in America today that does not house at least one pair of these iconic jeans. They also added to their blue jeans lines with products like the Denizen ® brand and in the Levi’s ® Curve ID collection for women and Dockers ® khakis business causal wear for men.
- Sales volume
According to their 2012 Annual Report, even with this solid retail customer base sales dropped by 3% last year and the company is reviewing and restructuring for the future.
Here are the 2012 financial highlights:
•
Net revenues
of $4.6 billion decreased three percent on a reported basis, less than one percent in constant currency, as increased sales from the company-operated stores in the Americas and Europe were offset by the adverse impact of challenging market conditions in Asia and strategic choices taken during the third quarter to exit certain businesses in the Americas and Asia.
•
Gross margin
of 48 percent was just slightly below the prior year. Excluding currency and the impact of the Denizen ® brand exit in Asia, gross margin improved due to lower cotton costs, increased sales from retail stores and lower sales to the discount channels.
•
Net Income
was $144 million, up from $138 million the prior year, reflecting a tax benefit
recorded in the fourth quarter. •
Cash flow
•
Net debt
at the end of the fiscal year was $1.3 billion down from $1.8 billion at the end of the prior year. Due to the improved cash flow and our successful debt refinancing, we reduced gross debt by more than $200 million. We are committed to deleveraging the company and strengthening the balance sheet over time.
- Primary & secondary competition
Because they are an iconic manufacturer of every day clothing that expanded from a niche market to a broad clothing line they are in competition with every other clothing manufacturer on earth. Part of their new corporate strategy in 2013 is to strengthen their market share based upon their iconic brands and solid foundation.
With Iconic Brands and a Strong Foundation in Place We’re Starting to execute in 2013
In 2012, we started to change how we work as a company. We developed a new operating model that featured three strong pillars for our business: our brands, commercial operations and global retail. We put leaders in place for each of these new pillars and organized teams around them. By creating a strong foundation with new leadership and a new operating model, we’re building a company worthy of our brands. .
- Emerging trends in the marketplace
One of the challenges to American clothing manufactures is not the bottom line getting bigger, it is the growing lines of the American public’s bottoms. To counter that Levi Strauss launched new clothing lines to cover this problem. With the public watching for both corporate responsibility and needing everyday comfortable products Levi Strauss started restructuring in 2012. In their 2012 annual report they inform us that they launched their first global product line and are expanding their web commerce to include the European market. By doing this they hope to increase market share while simultaneously reducing complexity on a world wide scale. They are also expanding their appeal to women with their Levi’s ® Curve ID and Denizen ® brands.
Another way they are looking to increase their market appeal is by being more environmentally friendly to that end they created Levi’s ® Water < Less ® which substantially reduces water use and the release of chemicals associated with the manufacturing process into the environment. Another area where the company is seeking to increase performance wear by the global expansion of Commuter ™ product and with a Nike skatewear collaboration. In 2012 buyers liked these products and sales increased in both the Americas and Europe. They had trouble in Asia though. There they face competition the important markets in China and India, were hurt by pulling he Denizen ® brand out of these markets. (Levi Strauss, 2013)
.- Business sector
Levi Strauss & Co. operates its own physical retail stores but has been slow in taking advantage of the virtual market place. Although clothing sales are traditionally slower over the Internet than many other products are, classic brands like Levi’s fare better since many people know exactly what they want and sometimes face difficulty finding their old favorite cut and style. Because of this it is not a matter of trying on pair after pair of jeans to find the right combination of fit and style, it is one of ordering another pair of their favorite 501s in the right size and color. This makes the idea of virtual clothing shopping preferable to a retail experience.
FORECAST:
Levi Strauss & Co. is founded on a solid product line of physical and business work clothes. They are well constructed classic styles, intended to serve as every day wear in a broad range of situations from truckers and the Levi’s ® trucker jacket and Dockers ® khakis that are the “go to” business casual for thousands of men around the world. The recent economic downturn hit the company especially hard since buying new work clothes, is not a priority when you are unemployed, with unpaid student loans and a late mortgage. Having a closet to hang your clothes takes priority over having new clothes to hang.
PRIMARY CUSTOMER:
-Description
The primary end user for Levi Strauss products is the working man. In their 2012 Annual Report they state their intent to secure their market share and grow their business by focusing on men’s bottoms and state that “These make up the majority of our revenues and profits.” (Levi Strauss, 2013).
-Company’s market share
Levis and Dockers brands are staples in the men’s working clothing markets. This includes both physical labor where men want a good tough yet comfortable pair of jeans to office environments where they want a pair of pants they can pull out of the closet and put on every day. As the global economy improves the Levi Strauss clothing line claims a larger share of the clothing market. As I noted earlier, at the present time, their sales are down by 3% in 2012.
SECONDARY CUSTOMER: CONSUMER SEGMENT:
-demographic information
The secondary customer for Levi Strauss & Co. products is women with the same demographic profile as men. That is Levi Strauss has, and is further developing, clothing for working women that range from physical labor in blue jeans to the Levi’s ® Curve ID and Denizen ® brands. They are also releasing a new line of their 501 pants in a variety of fabrics and colors that may appeal more to women who want a more feminine cut of slacks for the office without sacrificing comfort.
-psychographic analysis
Along with their new product lines and revamped business plan Levi Strauss & Co. has also introduced a new advertising campaign as well. With messages like “Carpe Diem,” “Go Forth,” and “This is a pair of Levis” they hope to reach a young professional market with all types of clothing products including dresses, shirts and non-denim products along with its classic jeans. (Elliot, 2012) This campaign is produced by Wieden & Kennedy, an advertising agency out of Portland, Oregon. The account director there described the aim of this campaign, launched in 2012 as one that ““encourages youth to get up every day and make their collective worlds better,” he added. “It is about making their way in a world that’s uncertain, but on the bright side, it’s theirs to create.” .
-Emerging consumer trend information in relation to the business sector
The workforce is getting younger, and as the economy improves more recent college graduates will be entering. They will need something to wear and Levi Strauss & Co. wants to be there right along with them. They still need to find the right combination of virtual and physical market representation, and the right marketing appeal, but those are not insurmountable problems. It seems to be working, the second-quarter 2013 reports show a 5% increase after additional losses in the first quarter of 2013. (Levi Strauss & Co. , 2013).
Intangible Innovations
Historically, Levi Strauss & Co. performs best in an economy with high employment percentages. Therefore, it suffered in the recent economy. With the falling unemployment rates, particularly among young recent college graduates, Levi Strauss & Co. is poised and ready to take advantage of the new market trends. This can be seen not only in its more forward thinking styles and marketing but in the new technology it is presently introducing to the industry.
It is one thing to produce a table of data and figures and show the interrelationship between, economic trends, unemployment levels and market share. It is another to determine with any degree of accuracy how well intangibles like corporate responsibility and sustainable manufacturing process are going to affect the future bottom line for a company. Never the less, this is one of the things Levi Strauss & Co. is banking on for the future. .
Bibliography
Elliot, S. (2012, 07 24). Carpe Diem, Preferably in a Pair of Jeans. Retrieved from New York Times: http://www.nytimes.com/2012/07/25/business/media/levi-strauss-ads-urge-the-young-to-seize-the-day-in-jeans.html?_r=0
Fortune 500. (2011). Is Levi Strauss a great company, or what? Retrieved from Fortune 500: http://money.cnn.com/magazines/fortune/fortune500/2011/snapshots/255.html
Levi Strauss & Co. . (2013, 007 09). Levi Strauss & Co. Announces Second-Quarter 2013 Financial Results. Retrieved from Levi Strauss & Co. Announces Second: http://www.levistrauss.com/news/press-releases/levi-strauss-co-announces-second-quarter-2013-financial-results
Levi Strauss. (2013). Levi Strauss. Retrieved from Levi Strauss: http://www.levistrauss.com/
Levi Strauss. (2013). Levi Strauss 2012 Annual Report. Retrieved from Levi Strauss: http://levistrauss.com/files/lsco/ar2012/pdfs/levistrauss_annualreport_2012.pdf
