Outside Levi’s flagship store in New York’s Times Square, the sidewalks are teeming with tourists, buskers, and unauthorized Elmo impersonators. Inside, the store is teeming with mannequins. A shopper wandering down to the lower level is quickly surrounded by mannequins in T-shirts, mannequins in chambray shirts, mannequins in sweatshirts, and even mannequins in puffers—usually paired with the brand’s trademark jeans.
Levi Strauss & Co. CEO Michelle Gass is, of course, a living human being, but clad in her dark-blue jean jacket and straight-leg black jeans, the self-proclaimed “denim head” blends in well on the store floor. As she leads Fortune on a tour, she draws a reporter’s attention to a group of graphic T-shirts depicting Western vignettes with lassos and cowboys, and to others illustrating the invention of blue jeans in 1873. “Our Western tops are having a moment right now,” she says. “I’m not sure this Western trend is going to last forever, but as it is happening, we want to be driving it.”
The company has deployed this mannequin armada, as opposed to relying merely on racks and shelves, to more effectively suggest complete “looks” to shoppers. Nearby racks showcase denim dresses, the better to draw more women to buy from the historically male-catering brand. Some of those dresses might be paired nicely with its jean jackets: Levi’s clearly doesn’t mind the rebirth of the sometimes-derided Canadian tuxedo denim-on-denim look.
The wide range of merchandise and how it’s displayed show what Gass, who celebrated her first anniversary as CEO this January, has in mind for the brand’s future—and for helping Levi Strauss find a higher gear for growth in an intensely competitive and crowded denim market.
The flagship store represents a major pivot in Levi’s strategy: The company intends to rely less on wholesale revenue from retail partners like Walmart, Target, and department stores, and more on sales from its own stores and website—called the direct-to-consumer or DTC channel in retail—the better to control its own destiny in the perilous apparel industry.
Gass’s first full year in the corner office has shown that the strategy is promising, though it hasn’t yet delivered blockbuster results. Revenue rose 3% in fiscal 2024 to $6.4 billion, as consumers overall pulled back on spending on premium denim. Levi Strauss remains far from the $9 billion to $10 billion revenue mark it promised Wall Street a couple of years ago. And Levi’s shares have risen only modestly since Gass joined, adding pressure on her to show financial improvement. Just before Gass became CEO, the company announced it was cutting up to 15% of global corporate jobs. “We made some really tough calls,” Gass says. “We recognized that we had to slim down our organization.”
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Still, Gass inherited a thriving company that had been brought back to overall health by her predecessor Chip Bergh. To leave her own mark, Gass wants to continue Bergh’s work by further modernizing the company on numerous fronts—from the visible and glam (such as slicker stores and cooler merch), to the geeky (like faster turnaround times on new products). There is also likely an additional motivation for Gass: Her tenure at Levi Strauss will be a way to show doubters what she is capable of after she proved unable to stem Kohl’s deterioration during her four and a half years as CEO there.
The company’s ambitious pivot plans are likely to cause some growing pains, Gass hints. “We’re kind of new at this,” she says. But she also notes that she’s starting from a position of strength: “It’s not a turnaround, we have an incredibly strong foundation.”
From CEO to apprenticeship to CEO again
Levi Strauss & Co. was launched in 1853 when its namesake founder, an immigrant from Germany, moved to San Francisco to start a dry goods store that would serve the general stores popping up locally during the Gold Rush. Strauss later struck gold of his own by creating durable work pants for miners: He added metal rivets to high-tension spots in the garment, and thus the iconic American blue jean was born.
Over the years, the pants went from work garment to everyday staple to pop-culture fashion mainstay, sported by everyone from Bruce Springsteen on the cover of his Born in the USA album to Beyoncé, who cowrote a song called “Levii’s Jeans” for her Grammy-winning 2024 album, Cowboy Carter.
Gass, in short, has a lot to work with. She also came in exceptionally well-prepared. She had already been CEO of a Fortune 500 company: Kohl’s, the department store, is three times the size of Levi Strauss and is in some ways more complex. And Levi Strauss’s board arranged for Gass to work with Bergh closely before Bergh rode off into the sunset. Levi’s hired Gass away from Kohl’s in November 2022; she started as president a few weeks later, and shadowed Bergh for 13 months in all before becoming CEO herself.
When Bergh took the reins in 2011, Levi’s was a debt-laden company that had missed the newest denim trends and become a nostalgia play. By the time he left, Levi’s had a healthy balance sheet and was firmly in growth mode again, with revenue rising 30% in his 12 years at the helm.
The idea behind the year of overlap with Bergh was to help Gass deeply understand the inner workings of the company and hit the ground running. Together they traveled to visit suppliers and stores around the world, getting to know franchise partners. (Overseas, most Levi’s stores are franchises.) “This was a best-in-class succession that I hope many others will embrace,” says Gass.
But if Gass had a lot to work with, so did Levi’s. Though Kohl’s struggled during her tenure, enduring revenue and profit declines and attracting attacks from activist investors, the CEO herself drew admiration for some daring moves—including setting up Amazon return centers to get people who didn’t normally shop at Kohl’s into stores and landing a deal with Sephora to open shop-in-shops for the wildly popular beauty brand. (Kohl’s, meanwhile, continues to struggle, two CEOs later.)
Gass’s nearly 10 years at Kohl’s were, in a sense, perfect preparation for the Levi’s gig. Kohl’s is primarily an apparel retailer, selling its own store brands—including labels like Sonoma, which features many denim products. Before becoming CEO there, Gass had served as chief merchant, the executive who oversees product selection and sourcing, an experience she says helped her understand fashion trends and the product development and manufacturing processes. “That gave me a sixth sense of what questions to ask,” she says. Her Kohl’s years also helped her bone up on e-commerce. “Kohl’s was in an industry being hugely disrupted when I joined in 2013,” she says, adding that this led her to build out a big e-commerce business, now about $6 billion at Kohl’s.
The fact that Kohl’s operates more than 1,000 large stores gave Gass additional experience the Levi’s board was seeking, given its desire to expand its own store footprint. And before Kohl’s, Gass had spent 17 years at Starbucks, much of that time in Europe, honing her brand-building chops in a fast-growing international business.
So her year with Bergh wasn’t so much an “apprenticeship” as it was a crash course to help her make her way down Levi Strauss’s learning curve. Soon enough, her vision for what Levi’s should stand for, and by extension, how she could leave her mark, came into focus. One key piece of that was pushing the boundaries of what Levi’s sold—and to whom. Indeed, Gass recalls asking Bergh on one of their trips abroad: “Well, Chip, where are all the denim skirts I’m hearing women want?”
Evolving from jeans for guys to denim for everyone
Until relatively recently in its long history, Levi’s was mostly about blue jeans, and primarily for dudes. Yes, the company sold some tops, like T-shirts with the classic, Batman-like Levi’s logo, or trucker denim jackets. (There was also Dockers, the once-popular brand of sensible chinos that were a fixture of many men’s wardrobes for decades; Levi’s now wants to sell that off.) But jeans for men were the bread and butter for eons. Under a strategy Bergh developed and Gass is refining and further implementing, a much broader denim and denim-complementing lineup is the focus.
That broader lineup is crucial to the company’s future, because the days when Levi’s had the denim market largely to itself are long gone. Denim is a $65 billion global market, and while Levi’s is the top-selling brand globally, it is dealing with strong competition, from the likes of Kontoor Brands’ Wrangler on the lower end, Rag & Bone and Buck Mason at the pricier end, not to mention popular non-denim rivals like Vuori and other so-called lifestyle brands.
Gass says that just a few years ago, Levi’s sold seven bottoms for every top; now that proportion is two bottoms for each top it sells. There is a lot of gold to mine in tops, which are bought much more frequently as consumers refresh their wardrobes. (A good pair of jeans, in contrast, can last years.) Tops still only represent 27% of sales—a sign that there’s room to grow.
Selling more tops also means winning over more women, who buy clothing more often. Women currently generate about 36% of Levi Strauss sales, up from about 29% in 2018. Gass says she thinks women can soon get to 50% of sales. “We should be at least a $10 billion company,” Gass says; “That’s going to come through a few ways, but women’s [clothing] is going to be a key means to do that.”
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“We’re no longer just selling jeans, we’re selling a denim lifestyle,” Gass likes to say. At the same time, those puffers, hoodies, and sweatshirts are there to entice someone initially attracted to Levi’s jeans to grab something else. “Not everybody wants to wear denim on denim every single day,” she notes.
There is also something symbiotic about tops and bottoms, as fashion changes in one category can generate sales for the other. For instance, if the trend in jeans is for high-waisted pants that creep up toward the rib cage, that creates more demand for shorter tops; very tight jeans, meanwhile, often spark interest in looser tops.
“A trend has a halo effect, and two items can definitely play into each other,” says Kristen Classi-Zummo, an apparel industry analyst at Circana, a data firm. “We’re seeing more and more brands take more of a lifestyle approach, rather than be category experts siloed in one kind of product.”
Keeping up with such trends, says Gass, means Levi’s has had to change its metabolism regarding how it designs and manufactures its products. Typically, the lead times from conceptualization to store shelf for Levi’s goods has been 16 months, a touch long for the apparel sector; Gass is working to bring that down to 12 months, in service of helping Levi’s jump on trends more quickly. “The wedge boot cut is on fire,” Gass says, by way of example. “So it’s chase, chase, chase.”
At the same time, Gass is gingerly taking the Levi’s brand a bit further upscale. Last year, the company discontinued its Denizen brand, a cheaper version of its jeans it had developed for Target. (Target still sells Levi’s mainstay Red Tab jeans.) But it has also created Blue Tab, a premium segment launched this January in Japan that includes Japanese-made and Japanese-inspired selvedge jeans and tops to go with them. (Blue Tab items will be available in the U.S. later this year.) Selvedge involves a unique weaving process that results in a higher-quality, more expensive product: The priciest Blue Tab bottoms cost $350, well above the $90 for traditional 501s.
Some brands can get burnt and annoy customers when they go too high-end. But Gass says nothing ventured, nothing gained. “We’ll see how high is high enough,” she says.
Luring customers back to stores
Cool merchandise doesn’t count for much when it isn’t showcased properly. And this is where Levi’s DTC push, now accelerated under Gass, comes in.
Today the Times Square flagship is one of some 1,300 freestanding Levi’s company-owned stores; Gass has been aiming to add dozens of stores per year. The flagship admittedly features far more bells and whistles than most of the brand’s stores, but it highlights elements that Levi’s hopes to roll out broadly—the kinds of services that won’t be available at Walmart or Macy’s.
In addition to mannequins sporting those complete looks, there’s a customization service where people can have their jean jackets embroidered. There are also stylists to help the casual consumer navigate different categories of jeans on offer, distinguishing baggy (currently the hottest trend in denim) from slim, straight, loose, or boot cut, not to mention 501 versus 502, 511, and so on. “Sometimes buying jeans can be intimidating,” admits Gass, whose go-to items are the straight-cut 724 high-rise jeans and a denim jacket, which has replaced the leather jacket she favored before joining Levi’s.
When asked if Levi’s risks tacking too far in the direction of DTC as other brands have (among them, Nike, before it course-corrected last year), Gass is quick to note that she is not looking to shrink the “wholesale” business of sales through other retailers. “Levi’s is a really important brand to those [wholesale] customers, and we both agree we raise our game,” she says, adding that the business is currently growing, albeit slowly. Rather, the idea is to see wholesale drop as a percentage of Levi Strauss’s total business—an arena where the company is making progress so far.
And just as tops and bottoms can benefit one another, DTC and wholesale can, too. In a research note last month, Barclays analysts said that Levi’s “proven demand trends in its DTC channel” would help entice wholesale customers to place orders, more confident those products will actually sell rather than collect dust on shelves.
Building buzz on Beyoncé and Bob Dylan
Of course, retail is not just about supply chains, the wholesale-vs.-DTC debate, and other prosaic matters. There needs to be buzz and fun, too, and being part of the zeitgeist is essential to success. That was a major motivation for Bergh’s decision in 2013 to buy the naming rights to the San Francisco 49ers’ new stadium in Santa Clara, Calif., a deal the company extended last year into the 2040s at a price of $170 million. Levi’s also recently introduced a new Complete Unknown capsule collection to sell pieces seen in the new Bob Dylan biopic, including a suede jacket and a pair of 501 jeans.
A new collaboration with Beyoncé also falls in the zeitgeist category. At a Levi’s showroom in Manhattan’s Garment District, a large video display plays a recent Beyoncé Levi’s ad, one in an ongoing campaign, on a loop. The spot depicts the singer in a laundromat stripping down to her undergarments while a pair of Levi’s jeans gets washed. Beyoncé has been boasting her love of Levi’s going back to her Destiny’s Child days in the 1990s; she became a paid spokeswoman last year. “The right collaborations create brand heat and drive relevancy for a brand that’s been around for decades and decades,” says Gass.
Like some of the celebrities that wear Levi’s, the company has been outspoken on social issues, such as calling for stricter gun control, lobbying for more registration of young voters, and voicing support for civil rights. Despite the current anti-DEI climate, don’t expect Levi’s to tone that down, Gass vows. “One thing I will tell you that is not changing is our commitment to live our values,” she says. “We’ve been supporting diversity and inclusion for decades.” Some 45.3% of Levi’s top management was female in 2023, and the company has stuck to its diversity goals in hiring and promotions.
Gass’s first year at the helm had its bumps but overall has been modestly successful. Shares have risen 8% since she became CEO—a touch below what the S&P Retail index did during that time—and business improvements are gathering speed. But Gass says she’s playing the long game. For her, success in five years looks like a Levi Strauss retooled for the intensely competitive apparel market, but still anchored by its rich history.
“There’ll be some mistakes along the way; not everything goes as perfectly as one might expect,” Gass says. “But I feel like we are poised to deliver.”
