Levi's supervisor, Gass, exhibits no inclination towards concessions.
Getting Levi's Straightened Out: Mickey G's Macro Makeover
By Alex Wehnert, NY
Mickey G, a no-nonsense individual, has her eyes set on a denim transformation. As the new Levi Strauss CEO, she's determined to give the classic brand a much-needed overhaul. With her sights focused on trimming the fat and boosting brand power, here's what to expect.
Streamline the Brand Stable
Many believe Mickey G's making her move. Aiming to ditch distractions, Mickey G intends to make the Levi's brand the main attraction. In the third quarter, the Levi's core line, known for its iconic 501 jeans and trucker jackets, saw growth of 5%, but other business areas held it back. Mickey G announced that the Two-Horse Brand will now target a more affluent market, leaving behind the bargain basements. She's cutting back on sales channels that rely heavily on discounts, trying to increase sales through company-owned stores.
Focusing on the Main Squeeze
With apparel manufacturers typically boosting their profitability via direct-to-consumer sales, Mickey G might be taking a calculated gamble. Indeed, Levi's gross margin has improved in four consecutive quarters compared to the previous year, reaching 4.4% in the third quarter. However, distancing the brand from its retail partners can be tough for fashion giants. Nike's recent experience serves as a cautionary tale.
The Great Retail Shuffle
Under former CEO John Donahoe, Nike focused more on direct-to-consumer sales only to retreat after a weak spring sales performance in 2020. Mickey G, on the other hand, is known for her careful approach. Instead of diving headfirst into the deep end, she prefers "no-regret moves"– small, low-risk steps with significant long-term impact. During her time at Kohl's, she made moves like the integration of Sephora into Kohl's stores, which was a turning point for her rival.
Leading a Beauty Revolution
Back then, Sephora had a long-term agreement with J.C. Penney, but when Texans went bankrupt in 2020, Mickey G lured the French into Kohl's stores amidst the pandemic with a tempting offer: access to up to 1,200 stores and 65 million customers. Today, Sephora operates shops in 900 Kohl's stores, and the glamour of the cosmetics brand has fallen on the department store chain. Peter Boneparth, Kohl's chairman, considers the collaboration "one of the most important expressions of change at Kohl's" and "the legacy" of Mickey G.
The Lesser-Loved Assets
Mickey G's ledger is a mixed bag. While she managed to become the CEO within five years after joining Kohl's in 2013, she also reshaped the portfolio with brands like Under Armour and Tommy Hilfiger and significantly expanded e-commerce capabilities. Yet, many shareholders found her recovery-pacing too slow following a drop in profits and a failed sale to the now-bankrupt retail holding Franchise Group.
Launching Levi's Into the Stratosphere
Shareholder pressure pushed the company to consider Mickey G's ousting, but she weathered the storm. At a business dinner in October 2022, the Levi's CEO Chip Bergh asked Mickey G if she could envision becoming his successor. Before the end of the year, she was promoted to president of the jeans brand. With her move to the top, she's had to navigate layoffs and a disappointing first year with less-than-expected revenue growth. Make no mistake; Mickey G needs success stories fast, especially with a high-profile marketing campaign featuring pop star Beyoncé on the horizon.
- Mickey G, in her role as Levi Strauss CEO, is aiming to focus the brand's attention on ‘Levi's’ core line, seeking to increase sales through the company-owned stores instead of relying heavily on discounts, as part of her plan to make the Levi's brand the main attraction.
- Mickey G's approach at Kohl's, where she led the integration of Sephora into Kohl's stores, showcases her preference for "no-regret moves" – small, low-risk steps with significant long-term impact.
- Nike's experience in transitioning to direct-to-consumer sales and subsequently retreating after a weak performance in 2020 serves as a cautionary tale for Mickey G's plans to distance the Levi's brand from its retail partners.
- Despite shareholder pressure and struggles with layoffs and disappointing revenue growth during her first year as Levi Strauss CEO, Mickey G has displayed a strategic mindset capable of turning brands around, as was evident at Kohl's with the successful collaboration with Sephora.
