Yahoo Lifestyle Michelle Gass on Her First Year as Levi’s CEO, the ‘Beyoncé Effect,’ Q4 Profits and More
Year one of the Michelle Gass era at Levi Strauss & Co. has been a busy one.
During her first 12 months as chief executive officer, Gass has moved to put the company on a new footing.
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It started with layoffs, led to the closure of lower-margin businesses like Denizen and shoes, the decision to sell Dockers and a mega marketing deal with Beyoncé that helped fuel holiday sales.
All of that resulted in the fourth quarter featuring both sales and profit gains.
There are some complications going into 2025 — with a stronger dollar impacting businesses in Europe and Mexico and the threat of tariffs — but Gass told WWD that Levi’s is turning into a new company.
“We are a stronger company today than we were a year ago,” Gass said. “We really, this year, sharpened our focus on the Levi’s brand. We exited low margin businesses. We really amplified our focus on our key sales drivers, opportunities like women’s and our denim lifestyle category. We accelerated DTC. We stabilized wholesale and we’re also fueling the growth around the globe.
“We are tighter, more focused on the top line, the same’s happening on the bottom line, really fundamentally improving our structural economics,” she said.
Fourth-quarter net income rose 44 percent to $183 million, or 46 cents a diluted share, from $127 million, or 32 cents, a year earlier. Adjusted earnings per share of 50 cents came in 2 cents ahead of the 48 cents analysts projected, according to Yahoo Finance.
Revenues increased 12 percent to $1.8 billion for the quarter ended Dec. 1, just as the holiday rush got underway.
Organic revenues — which strip away the impact of foreign exchange rates, divestitures and calendar changes — rose 8 percent. Most of that organic growth came from the Americas, where sales rose 9 percent to $995 million, while Europe increased 6 percent to $434 million and Asia saw a 9 percent rise to $286 million.
“We’re proud of delivering these results as we fundamentally rewire the company end to end to operate as a best in class DTC retailer,” Gass said. “We’re seeing great progress on our transformation.”
The most visible part of that change to consumers might be Beyoncé in her Levi’s and all over the place.
Levi’s linked with Beyoncé in September for a yearlong marketing blitz that started with the singer recreating one of the brand’s famous TV spots.
“Beyoncé is really probably the biggest global partnership we’ve ever had in our history,” Gass said. “We’re a few months in. We launched our first chapter of the campaign, which we call ‘Reimagine.’ Chapter two is soon to come. And we’re very pleased. Results are encouraging. The Beyoncé effect is giving a lift to our business and contributed to our strong fourth-quarter results.”
But 2025 promises to keep everyone on their toes.
President Donald Trump has threatened new tariffs on, well, the rest of the world, but Gass said Levi’s is prepared.
“We have a very diversified supply base with over 25 sourcing countries,” she said. “That sets us up well overall, we are following a situation like everyone. As it relates to proposed China or Mexico [which have been specifically singled out by Trump], China is less than 1 percent of what we bring into the U.S. Mexico is also pretty small, about 5 percent.
“We’re confident now that we can continue to execute these strategies and see the sequential improvement year-on-year-on-year as we head toward becoming a $10 billion company with a 15 percent EBIT margin,” she said.
But that’s still a ways off.
For the full year, Levi’s posted adjusted earnings per share of $1.25 as revenues increased 3 percent to $6.4 billion.
And for 2025, the company is projecting organic sales will increase 3.5 percent to 4.5 percent while EPS comes in at $1.20 to $1.25.
That’s below the $1.37 analyst had penciled in, but Harmit Singh, chief financial and growth officer at the denim giant, chalked that up to the stronger dollar since Trump was elected and taxes, which are set to “normalize” for Levi’s after a couple years of effective tax planning strategies.
Investors were a little wary and pushed shares of the company down 4.3 percent to $17.29 in after-hours trading on Wednesday.
“The things that are within our control, we are controlling,” Singh said.
But he added that Levi’s is growing at about twice the rate of the global denim market and therefore picking up share.
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