Thinkers50 in collaboration with Deloitte presents:
A self-declared ‘brand guy’, Chip Bergh was appointed president and CEO of Levi Strauss & Co. in 2011. During his tenure the company has experienced a dramatic turnaround marked by outstanding performance and reclaiming its cultural relevance. In short, Levi’s has become cool again! Along the way, Chip has shown himself to be a provocateur.
In this podcast with Des Dearlove, co-founder of Thinkers50 and Geoff Tuff, Principal of Deloitte Consulting LLP, Chip explains why his own Levi’s have never seen the inside of a washing machine, how he galvanised the business community into pressing for gun violence prevention legislation, and the importance of continuing the legacy of Levi Strauss: for business to make a difference in society.
Chip also shares his insights on how he made the Levi’s brand great again and kept it relevant for the fickle Gen Z market – without alienating the baby boomers like himself.
This podcast is part of an ongoing series of interviews with executives. The executives’ participation in this podcast are solely for educational purposes based on their knowledge of the subject and the views expressed by them are solely their own. This podcast should not be deemed or construed to be for the purpose of soliciting business for any of the companies mentioned, nor does Deloitte advocate or endorse the services or products provided by these companies.
CEO, Levi Strauss & Co.
Inspired by the book Provoke: How Leaders Shape the Future by Overcoming Fatal Human Flaws; Wiley, 2021.
Hello, I’m Des Dearlove, the Co-Founder of Thinkers50, and I’d like to welcome you to Provocateurs, the podcast where we explore the experiences, insights, and perspectives of inspiring leaders. Our aim with this series is to provoke you to think and act differently through conversations with insightful leaders who offer new perspectives on traditional business thinking.
This is a collaboration between Thinkers50 and Deloitte, and my co-host today is Geoff Tuff. Geoff is a Principal at Deloitte Consulting LLP where he holds various leadership roles across the firm’s Sustainability, Innovation and Strategy practices, and he’s also the co-author, along with Steve Goldbach, of Provoke: How Leaders Shape the Future by Overcoming Fatal Human Flaws.
Geoff, great to see you.
Likewise, Des, good to be with you again. I am super excited about today’s guest. This is someone who I’ve actually crossed paths with a couple of times in the past, but many years ago. We’ve got Chip Bergh joining us.
Chip is a self-declared brand guy. He spent 28 years at Procter & Gamble in brand management and he led the integration of P&G’s $57 billion acquisition of Gillette, which is actually one of the times that I got to know him, and then ran that division for six years. Perhaps more relevantly, in September of 2011, he was appointed President and CEO of Levi Strauss & Company, which has been an amazing run, I think Chip all would say. So during his tenure, the company has experienced a dramatic turnaround marked by outstanding performance and reclaiming its cultural relevance. Even though I have always thought Levi’s was cool, what most people are saying is that Levi’s has become cool again, thanks to Chip and his leadership. So the company returned to the public markets with a successful IPO in 2019 and reported 2022 net revenues of $6.2 billion.
Along the way, Chip has shown himself to be a provocateur. His comment that his own jeans have never seen a washing machine, interesting point to come back and talk about, he does prefer to hand-wash them, made him a viral sensation. And his stand on gun control marked him out as a business leader of principle. One of his biggest legacies, he says, will be passing the CEO baton to someone to take the company to the next level. We now know that baton will pass to Michelle Gass with whom he is working closely to manage the transition.
So after all of that lead up, Chip, welcome. Thank you for being with us.
End of show.
End of show. Yeah, done.
Great to have you.
It’s great to be here. Great to see you again.
So before we get on to talking about your work, tell us a little bit about the journey, how you got into management, into senior management, and the journey up until you got the Levi’s job.
Okay, I’ll try to keep it really brief because it’s a long and winding road, but I went to a small liberal arts college in Pennsylvania, Lafayette College. I had an ROTC scholarship there and so I kind of knew my destination after graduation was going to be into the US Army and I served four and a half years in the military. I graduated in 1979 and moved to, at the time, West Germany. It was still in the middle of the Cold War. I was stationed outside of Frankfurt and spent a little bit more than four years, almost four and a half years, in the Army.
And then from the military, I guess I would say looking back at it, I was blessed. I found the perfect career fit for me. I guess one of the things about the military, I learned a lot there. I learned a lot about leadership and I would say I largely am the leader that I am today because of my military experience, but I also learned a lot about myself, and so I knew what I was looking for and I kind of knew what I thought would be a good fit and I found it at Procter & Gamble in brand management.
And I didn’t study business in college. I was an international affairs major. I joined P&G and I remember walking through the doors my very first day thinking to myself, “If I can just make it to brand manager, my career here will be a success” because P&G was infamous at the day for having an up-or-out culture. For every 10 people they hired, only three would make it to brand management. And so I kind of set that as my goal, and little did I know when I walked through those doors that 28 years later, I would retire from P&G as a Group President after running the $7 billion-plus Gillette blades and razors business globally as my last gig.
And through that 28-year period of time, I am a brand guy, as Geoff said in the intro, I had just an amazing career. I spent a lot of time in my formative years in the food and beverage business. I happen to think great marketers come out of food and beverage because you’re largely selling generally commoditized products, coffee, peanut butter, baking mix. Those were some of the products that I cut my teeth on with brands like Jif and Folgers and Duncan Hines. And what differentiates these brands is at the end of the day, great marketing and connecting with the consumer. There’s not a lot of difference between Folgers and Maxwell House except, “The best part of waking up is Folgers in your cup.” And so, great start.
In my career, I had a number of what I would call transformative assignments. My first general manager assignment, I was assigned to the very small and unstrategic business called hard surface cleaners, which were brands like Comet and Spic and Span and Mr. Clean. And out of that assignment, it was a $200 million business in the US, it was declining. The very first year I was there, we didn’t even make a profit, but out of that assignment, came Swiffer. We launched Swiffer in the test market. I left before it expanded globally, but that brand today is well over $1 billion brand globally, and so that was amazing.
I also had the opportunity to live and work in Asia, not my last assignment, my second-to-last assignment. I was assigned as the Regional President of basically the India, Southeast Asia and Australia, New Zealand, that collection, that geography, I guess. And that was outrageously fun. We tripled that business in six years. A young organization, reorganized, lots of fun. And then of course, running Gillette.
And that kind of led to a crossroads in my career. I’d been at P&G for 28 years, doing pretty good, I was kind of coming up to my mid-50s at that point in time, and kind of thinking to myself, “This might be it. Is this it? What’s going to be my legacy?” And I felt like I had more in me.
So, I got the phone call. I’d been getting phone calls for multiple CEO opportunities and I got the phone call for Levi’s. And the words out of my mouth when I got the headhunter call were, “Oh wow” because my recollection of Levi’s was when I was a teenager. At the time it was $4.2 billion in global, but it was struggling. And as I did my homework, I thought to myself, “Here’s an opportunity to make a difference, to really leave a legacy and make a mark.” And my hypothesis, my thesis, I guess, coming into the job was the brand was broken, it was lost. We had a lost generation of consumers and if we could put the brand back on track and make the brand the way it was when I was a kid, make it cool again, as you said, Geoff, that would turn the brand around, and by turning the brand around, we would, by de facto, turn the company around as well.
And so that’s basically been the journey over the last 11.5, almost 12 years now, is putting the brand back at the center of culture and having the brand resonate with youth again without alienating the older consumers like me who grew up with Levi’s, and it’s been an amazing ride.
And it’s tough to, I would imagine, to strike that balance, to make sure that you retain the heritage of what Levi’s was for so many people, but then essentially attract a brand-new audience.
Can you tell us a little bit about when you came into Levi’s, tell us a little bit about the circumstances and what had happened to the brand since your youth when it was cool, it was dominant. And I don’t know much about the history of Levi’s before you came there, but obviously, things seemed to be going sideways a little bit, or at least that was my perspective.
Yeah. So when I joined in 2011, the company was private, owned by essentially fifth and sixth-generation descendants of Levi Strauss himself, no private equity or any other outside money involved, an independent board with two family members on it at the time. Our balance sheet was over-levered. We had over $2 billion of debt on the books. We were making about $300 million of profit before tax at that point in time, if I remember right. We weren’t growing share anywhere. Our business was fundamentally a men’s blue jean bottoms business sold in US wholesale customers. Think Sears, JCPenney, Macy’s, customers like that. That represented almost 60% of our total business.
We did have a small direct-to-consumer business, retail stores, and a very, very small e-commerce business at that point in time. That was about 21% of our total revenues. We were global. We had business in over 100 markets around the world, but about 60% of our revenues were in the US and 40% of our revenues were outside of the US, and we were generally struggling just about everywhere.
The company peaked in the mid-1990s, in 1996, at $7 billion in revenues. And at that point in time, we had done the second LBO. We bought out some of the family members at what was, until not too long ago, a record-high share price. That’s where we picked up a lot more debt. And for the next, from ’96 until I came in 2011, the company just bumped along. We went from $7 billion to $4 billion in about five years, so massive shareholder value destruction in the late ’90s. And then the first decade of the 2000s, the company just bumped along. One year, the revenues went up, but the profits went down. The next year, they fixed the profits, but the revenues went down, and they just kind of bumped around between $4 and $4.5 billion in revenues for a decade, really going nowhere.
So, the company was not in great shape. We actually were a day away from going bankrupt in the early 2000s. We had consultants in here in the company in the early 2000s, around that point in time, basically burning the furniture, cutting costs and just trying to… It was all hands on deck just to pay the interest payments on the debt. And in fact, when I joined, we were spending more money on interest payments to service the debt than we were on television marketing on our brand on a global basis. And so-
What is it that you saw, Chip? I mean, one of the premises, as you know, behind this podcast is that the best leaders provoke the future that they want to see happen. That’s what makes them provocateurs. You obviously saw something. You saw, not just had a vision for where you wanted to take Levi’s, but you had some hope in what sounds like a bit of a shambolic situation.
Yeah, before I even took the job, I would talk to friends and family members, and without saying what it was all about, but I would ask them about Levi’s, and almost to a person, people would say, “I love that brand!” And, “God, I grew up with that brand. I wore that brand when I went to college. I still have my favorite Levi’s,” Right? Going back to 20-year-old Levi’s. And then I’d ask, “When was the last time you bought a pair?” And it’d be like, “Geez, I don’t know.”
20 years ago.
“10 years ago? 20 years ago?” Exactly. But everybody had this passion for the brand.
Yeah, well, I mean for me, the vision was very, very simple: make the brand the way it was when I was a kid. I missed Woodstock by a few years, but the saying was, if you were wearing clothes, you were wearing Levi’s at Woodstock. And so I just remember when I was in seventh grade, I like to say everybody has a Levi’s story too, and one of my Levi’s stories, many of my Levi’s stories is when I was in seventh grade, I asked my mom to drive me three towns over to the closest retailer that sold Levi’s because I was going to wear… The cool kids wore Levi’s to seventh grade. And that was my very first pair of Levi’s. I still remember it vividly.
And there are very few brands that have that kind of emotional attachment where it gets burned into your brain like that. And that’s what I saw. I just saw this… We’re celebrating, this year, the 150th anniversary of the 501 jean and the 170th anniversary of the company. This is one of America’s longest-standing legacy companies, and I really believe that by honoring the history and the legacy of the brand, combined with great innovation and great marketing, which is what I spent my career doing, that the combination of those things could put the brand back on track and we could make the brand great again.
Also, when I was doing my homework, I saw nuggets of opportunities. Most of the business, as I said, was men’s blue jean bottoms. Women buy more apparel than men do. And we had a very, very small women’s business, and that still represents an opportunity. It’s bigger today than it was back then, but it’s still an opportunity for us. So I saw reason to believe and hope, especially the way people responded to the brand when I’d have these conversations, it was like people still loved this brand. There is this latent love for Levi’s and all we got to do is just dust this baby off a little bit and put it back at the center of culture and it’s going to take off. And that’s, in an oversimplified version, that’s a big part of what we did.
I guess one of the problems, one challenges for a longstanding brand, is how you remain relevant. It’s almost because there’s a little something… I mean, I’m talking as someone who has never bought anything but Levi’s. As far as I’m concerned, Levi’s equals jeans, that’s just regardless. So I grew up with that, but almost automatically, the next generation rejects what their parents did.
I suspect it lies with the innovation and keeping a brand fresh, but it’s almost like there’s a little bit of rebellion in jeans as well. There’s a little bit of rebellion in Levi’s. We all like to think we’re rebels, but we don’t want to rebel in quite the same way as our parents rebelled because that defeats the object. So, how do you manage that?
Well, first of all, you’re absolutely right. I mean, part of the character of the brand is there is this little bit of rebellion to it and there’s also a little bit of tongue-in-cheek to it as well. And our latest advertising tries to capture that with true stories about Levi’s. Again, back to this point that everybody’s got a Levi’s story, but it is a combination of the innovation and then just how you connect with the consumer.
And it is really important for us to remain relevant with the youth, with what we call young consumers, youth consumers, which we define as 18 to 30 year olds. So it’s not young kids, it’s 18 to 30 year olds. And that really is the brand’s sweet spot. And the trick has always been how do you maintain relevance with that cohort, with that generation, without alienating the Baby Boomers like me? And we have been able to magically deliver on that through the years through a combination of innovation, marketing.
And I will say that Gen Z, they’re a tough nut to crack. This generation is much more fickle than the generations before it. They are much less brand-loyal and brand-centric. They’re very, very much into sustainability, circular economy, recycling, upcycling, and we’ve navigated to accommodate that. I mean, we’ve done a bunch of things to really appeal to that consumer dynamic that is real, it’s here, and it’s here to stay. And all of those things have worked to help us grow share. We’re now the market share leader with young consumers, 18 to 30 year olds, here in the US, which is where we’re best able to measure that. And it has been through a combination of different things. And we’ve done it without really alienating the older consumers, and that’s been the key to this brand’s success.
We are, by far, the number one denim brand in the world. We are bigger than the number two, three and four brands combined, and we’re number one on both men’s and women’s globally. When we lead, we can set trends. We are so big in the category that when we put a stake in the ground and say, “This is where we want the category to go,” we’re generally pretty successful at driving new trends and that helps a lot too.
So let’s talk a little bit about where it started, Chip. So when you come into the company, we heard before about the state it was in, I’ve known you to be a pretty disciplined guy over time. Tell us a little bit about what you did to understand the situation, to get to know the company, and what that journey over the first couple of years looked like.
It’s a great question. So the very first thing I did, and this was very sincere, everything about me is very authentic, but I came here from packaged goods. This is an apparel company. Not just that, we’re an apparel retailer. So I was out of my swim lane to some extent. I’m a brand guy and I really did believe that by fixing the brand, we could get this company back on track. But I didn’t know anything about apparel or retail. So I came in with a huge amount of humility. I had a lot I needed to learn.
And so one of the very first things I did was I went on a listening tour and I sent the top 60 people in the company a list of six questions, I’m not going to remember all six off the top of my head, but what are the three things that you think are most important? What three things should we stop doing? What’s the one thing you are afraid I might do? What’s the one thing you wish I might do? And then there were two more. The last one was open-ended. Do you have any other suggestion for me?
So I sent everybody the questions in advance and then I went and met with them in their office or wherever they were, a bunch were by phone, it was before we had all this great technology. And I generally listened and used it as an opportunity as well to get to know the top 60 people. And I kind of thought it was going to take me 30 or 40 or 50 interviews for a clear picture to come together.
And I’ll tell you, after about 15 interviews, it was really, really clear that there are some things about this company that are part of the special sauce. Our values is something that is really, really important to who we are. I firmly believe it’s part of the reason this company’s been around for 170 years. That came through crystal clear. We have a foundation that does a lot of work, it’s part of how we live our values in the world, and the role that the foundation plays also came through very, very clear. And obviously, just the importance of investing in the brand came out pretty loud and clear as well.
What was also very, very clear was the company had no strategy. Everybody was kind of off doing their own thing. So marketing was doing their thing, the product team were doing their thing, finance team was doing their thing, and it didn’t come together anywhere. And in fact, people had a hard time understanding what other people were doing. So when I asked, strategically, what are the three most important things, people were like deer in the headlight, or they could talk about the three most important things in their function or their business unit, but they couldn’t talk about it from a company standpoint, so it was clear we needed a strategy.
There was also a lot of naivete or just misunderstanding or denial maybe that the company was in a pretty tough place. My very first town hall, which I did on day two, we had about five, 600 people maybe in the auditorium and outside. I asked at the very beginning, how many believe that the company is successful? And about 90% of the hands in the room went up because it’s great cocktail party fodder. “Where do you work?” “I work at Levi’s.” “Oh man, how cool is that? You get to wear jeans to work every day?” And we do have a great reputation and it is an amazing brand, but people had not really come to grips with just how unsuccessful the company had been over the prior decade. So, the work I had was pretty clear.
You used the word discipline. That is my middle name almost. I mean, it is ironic. I’ve done this exercise as I’m starting to think about what’s next for me and asking people to write a little bit about me and the word discipline comes up multiple times.
We brought in a lot of financial discipline. The first thing we did was we racked and stacked the business every which way you could possibly slice it. So where are we growing? Where are we declining? Where are we making money? Where are we losing money? Where are we driving cashflow? Where are we burning cash? I mean, just where are we growing share? Where are we losing share? Where do we have high market shares? Where do we have low market shares? Just every list I could think of, I’d go to the finance organization and say, “Rack and stack it. I want to see by country.”
And as we went through that exercise, a couple of things became really clear. We had a core part of our business that generated a lot of our revenue and almost all of our cash and all of our earnings. And that was our core men’s bottoms business, primarily sold in US wholesale and our top-five markets globally. And we called that our profitable core business. And that business was great, except in a good year, might grow 1% or 2%. And the problem was that was what the company was banking on year in and year out. That was where they were really, really focused. It was necessary but not sufficient.
So if you want to grow ahead of the rate of inflation, you want to grow at 4% or 5%, mid-single digits, we had to do more. And so that was about searching for where do we have our biggest opportunity?
That was our women’s business. We decided to focus on women’s and our tops business primarily. We have other categories, outerwear, footwear, things like that, but it was really women’s and tops were the two categories that we saw as an opportunity to expand into and where there was a lot of white space, low market share, not very well-developed. Even though we’re number one in women’s and were back at the time, the women’s category in business is so fragmented that we weren’t even number one in our biggest market, the US. So we decided to focus on our women’s business.
And then the third big choice that we made, which looking back on it, was very fortuitous, was we were going to double down on becoming a direct-to-consumer retailer. We were going to drive that DTC, direct-to-consumer business. And what got us to that was not… We didn’t foresee the meltdown of Sears and the challenges that US wholesale predominantly would have over the next decade.
It was primarily there were two reasons driving it. Number one, structurally, maybe three reasons, structurally, very high-gross margin business and higher revenues. Number two, as a brand guy, we’re in control of the brand in our own stores, we’re in control of the brand on our own retail sites. You walk into a Sears or a JCPenney, you’re going to get whatever Sears or JCPenney decides to execute. In our own store, we’re in charge. And then the third thing, with a little bit of foresight, was we have the consumer relationship and all of the data that goes with it, and that became the other compelling reason to double down on DTC.
So, that became our strategy. And it was our strategy right until the middle of the pandemic when we decided to refresh it literally 10 years later. And that strategy served us well, got the company turned around, we had several years of double-digit growth leading up to the IPO. It took us through the IPO and into the pandemic and it really did serve us well. And the evolution of the strategy is really just a sharpening of it more than anything else, as things during the pandemic, it became really, really clear what was super critical to us going forward.
You mentioned earlier, the generation, younger people are much more concerned about what’s going on with the planet and some of that stuff. And of course, you’ve obviously moved the company in that direction, which is some of this stuff and this background is what gave rise to the famous comment about not washing your jeans. The fact that, it’s my understanding is, that what the point you were making if I got it right, was that actually, you don’t use as much water in manufacturing as you used to do, but actually a lot of water gets used by people unnecessarily washing their jeans. Is that right?
Tell us how that all unfolded and you found yourself at the center of that storm.
Yeah, it was actually one of my very, very first kind of big conferences interview was at I think a Fortune forum on sustainability. And it wasn’t really a planned comment, but we had done a lifecycle analysis of a pair of Levi’s, even before my time, and what we discovered is just focusing on water as a critical natural resource that is now, I live in California, in very, very short supply in many parts of the world. And what we discovered is that about half of the water that’s consumed by a pair of jeans over the lifecycle of that jean is in the growing of the cotton. Cotton is a very water resource-intensive crop.
And then the other half just about is the consumer, especially here in the United States. We have a bad habit, we wear a pair of jeans, and we throw them in the laundry and these things absorb. They use a lot of water and washing machines use a lot of water. With my best denim, and if you talk to most denim heads, they will always tell you never put your jeans into a washing machine. So I typically just hand-wash or spot-wash my jeans. I mean, I’m mostly wearing them to work. It’s not like I’m out mucking the stalls or something with them, and if the jeans get really, really dirty, I’ll hop in the shower with them on and soap them down with a scrub brush and brush them off, rinse them off, wring them out and let them dry.
And so I made that comment that the jeans that I was wearing that day had never seen the inside of the washing machine. And the headline the next day was, “Levi’s CEO Never Washes His Jeans.” It kind of got paraphrased and it traveled around the world a couple of times. It’s had billions of views at this point in time, but that is the genesis of it.
And in many ways, I think rightfully so, it did position you as a provocateur, someone who you may or may not have said those words, but it certainly got a conversation going.
Tell us about another circumstance. You’ve now made other headlines, I think, about your open letter about not allowing guns in Levi’s stores. Can you tell us a little bit about that? That kind of falls in the same category as a provocative move to some.
Yeah. The fundamental thing behind it was we run a lot of retail stores. Here in the US now, we have about 270, 280 retail stores. And going back to 2016, we had some store managers that were very, very concerned about people walking into their stores with a gun strapped to their belt. And we have a policy, as most employers do, that you’re not allowed to bring a weapon to work and store managers were concerned. Somebody walks in with a weapon, we don’t know if they’re a good guy or a bad guy.
So we had done a bunch of homework looking at what Starbucks and Target and a few other retailers had done, which in general, was pretty much what we wound up doing, which was politely asking gun owners, “You don’t need a weapon to try on a pair of jeans, leave it at home.”
And we were getting ready to go live with it and we were debating the timing of it because of the elections coming up and we didn’t want to be the center of an election controversial item. And then literally, a gun went off in one of our stores in Georgia accidentally. A guy brought a gun in and dropped his trousers in the fitting room and the gun went off and he actually shot himself in the foot. But it could have been one of my employees, it could have been another customer in the store, it could have been anybody. And that was it. We decided to go live with it.
And little did we know it, but at that point in time, it put us right in the middle of the storm and we took a lot of heat for a short-term period of time, but now we were in the middle of the gun violence debate. And so after the Parkland shooting, we decided to double down and really go big on this issue.
We know that it’s one of the two most important issues to young consumers here in the United States. There’s now a generation of kids who have grown up with lockdown drills and a generation of kids, some of whom have had to live with live shooters. And it is kind of ripping the social fabric of our country apart at this point. But we decided… And we went back and forth with the Board of Directors, there’s a governance process in place. I don’t get to pick my spots just willy-nilly. This was going to be a new area for us to weigh in on and we had multiple reps with the board. And we decided if we were going to weigh into this issue, we needed to do it in a meaningful way.
And so I mentioned the Levi Straus Foundation earlier, through the Foundation, we developed $1 million program over four years where we were going to fund youth organizations committed to ending gun violence in this country, largely to activate the youth who were pretty fired up about this. So we activated with a number of the Parkland students who had formed, after the Parkland shooting. We’ve also now had a longstanding relationship with Gabby Giffords and her organization to end gun violence.
And I would say over the now probably six or seven years that we’ve been engaged, there truly is change happening. I mean, in 2018 or ’19, the Gabby Giffords Bill was introduced in the House of Representatives and we sent a letter to every congressman and woman encouraging them to support this legislation. And it was me and three other CEOs. That was it. We tried to get CEO support for the letter; there were four of us. It passed. Broadly speaking, it passed in a bipartisan way, then it went to the Senate and it sat on Mitch McConnell’s desk. We did another letter encouraging the Senate to act on this. And we got, I don’t remember, about 50 signatures for that.
This most recent legislation that passed and that President Biden signed into law, the Safer Communities Act, we also did letters supporting that and we had over 500 CEOs signed the letter. And the inside pool that I’ve gotten is the business community really did play a major role in getting that legislation passed.
Now, it’s a step in the right direction. There is still obviously a lot of work to be done because gun violence today is still ripping communities apart. We’re averaging more than one mass shooting a day in this country right now. The interesting thing is the vast majority of Americans, including the vast majority of gun owners, support common sense laws that will reduce or mitigate these tragic mass shootings that continue.
So still a lot of work to be done, but we are still at it and not backing down and continue to be committed to it.
So Chip, I’d love if I could just to your point about the gathering momentum as you got more and more business leaders to sign on to that, what is your philosophy about the role of business and social issues? And can you say a little bit about what it means to work with a brand or to manage a brand in what I think of today as the kind of histrionic reaction to anything that gets put out there, whether you want to call it the cancel culture or something else, we seem to be tuned to freak out at anything.
It’s not getting any easier, that is for sure.
First of all, this isn’t about me. This is who we are as a company. I describe it as this is fundamental to the platform of the CEO at Levi Strauss. It goes all the way back to Levi Strauss himself. The very first year he made a profit, he donated a percentage of that profit to a local orphanage. He believed that business existed to do more than make a buck and return it to the shareholders. Business existed to make a difference in the world, to make a difference in society, to make a difference in the communities where we live and work. And that has been a big part of what this company has been about from the very beginning. And so I am just carrying on his legacy, if you will.
But if you look at the history of this company, and I won’t take you through all 170 years of it, but we desegregated. Back in the day when we had factories in the South and the Southeast, we desegregated those factories 10 years before the Civil Rights Act. We were one of the very first companies to offer benefits to same-sex partners. We were very early in the AIDS epidemic instructing employees and our CEO stood in the lobby handing out pamphlets on the AIDS epidemic. We pulled support of the Boy Scouts when they banned gay troop leaders. We’ve been about equality and supporting equality, gender equality, LGBTQ+ equality. We’ve been on that for decades and it’s part of who we are.
And so it’s not about me. That is kind of who we are as a company and it’s part of the role of the CEO. It is getting tougher. There’s no question about it. I’ve been a CEO now almost 12 years. The job of the CEO is getting a lot harder because everybody’s taking shots at you and sometimes you feel like you have to walk on eggshells. And stakeholder management, classic stakeholder management, has become really, really tough because stakeholders sometimes have not just different points of view, but sometimes opposing points of view and navigating that becomes really, really difficult.
But we don’t see it as weighing in on political issues. We are nonpartisan on everything we do. We’ve done a lot around voting and voting here in the US because we fundamentally believe that that’s central to democracy. And so that’s been really, really important to us. But it’s not political, but everything today is being politicized and that is what makes it so challenging.
You mentioned that the job of the CEO is not getting any easier. You are in transition, let’s say. You’re passing the torch to the next CEO of Levi Strauss. We think we know that’s going to be Michelle Gass, if that’s what happens. What’s the advice? What advice do you offer her in particular in the sense that this is a very special company, but also to the next generation of CEOs who I know Geoff and Deloitte are very, very interested in helping develop the next generation?
Yeah. So I mean, the great news about Michelle, so she joined the company back in January so she’s been working now for the company for over now coming up on six months, and she and I are basically joined at the hip. She’s got a real job. She is company president, she is running the Levi’s brand globally and she is also running all of our commercial markets and our digital operations as well. So 85% of the company’s P&L rolls up through her, plus she’s got the mothership with the Levi’s brand. And it’s a great way for her to onboard to the company and learn the brand, the company, the business, our values. And she has been great.
She was a sitting CEO for five years at Kohl’s and had been at Kohl’s for 10 years. Before that, she spent 17 years at Starbucks. So she’s a retailer. And I’ve now been in the job for 12 years and I’ve been working with the board on succession for the last five or six years now, and we’ve had internal candidates who have left to go on to be CEOs elsewhere. And when the opportunity came along to hire Michelle and she was willing to take a step back and come in as company president, there aren’t many CEOs who won’t say, “I’m only coming in as a CEO.” She had the humility and I think the long-term view, the long-term vision of how special this brand is, how special this company is, that it’s worth it to take a step back for 12 to 18, we said within 18 months, from 12 to 18 months to have the privilege in a way of coming in and learning the business, learning the brand working side by side with me to set herself up for success. And she was willing to do that.
And her humility shows through and she is a learner. She’s come on really, really strong. I was the right guy for this company 12 years ago. The brand was broken and fixing the brand and turning the brand around was central to taking the company to where we are today. In the early days, the board wanted a mini-me, they wanted another me. And I kept saying, “No, you don’t want another me. We need a different set of skills for the future.”
And strategically, DTC is critical for us. That’s both our brick-and-mortar stores and e-commerce and she has a lot of digital experience. When she was a Kohl’s, she took Kohl’s digital, their e-commerce business, from $1 billion to $6 billion in less than 10 years. So she’s got a lot of chops when it comes to retail and e-commerce, and that’s what this company needs going forward. And how amazing that the next CEO is going to be a woman because our women’s business, it’s bigger than it was when I joined, but it’s still just north of a third of our business and it should be half of our business. And having her leading the company will, I think, accelerate our growth in our women’s business as well.
So she’s a great, great leader and this is going to be, at the end of the day, my biggest legacy is going to be my successor and I wanted somebody who was going to come in and take everything that we’ve done during my period of time here and take it to the next level, and that’s certainly what she’s going to do.
So Chip, it’s been a fantastic journey. It’s been a fantastic conversation. In the waning moments, what’s next? You almost retired, what, 12 years ago and you weren’t very successful then. Are you going to do it right this time?
I am going to take some time off to try to really think it through. I don’t think I’m going to go do another CEO gig, although my mother always said, “Never say never,” but I’m entertaining a lot of different ideas, but I’m still working full-time. I’ve got a full-time gig until Michelle is in the chair and I’m mostly focused on that successful transition. That’s probably my top priority.
And then I’ll take some time off. My wife and I will take a little bit of time to kind of step back. I got to hear that quiet voice inside my head because I’m sure eventually, the quiet voices are going to tell me what to do. I just can’t hear the quiet voice right now. There’s too much noise around it. And so taking a break, I think, will be the first thing that I’m going to do and then I’ll figure out where I go from there.
A break is well-earned.
Thank you, yes.
Absolutely. Well, that’s all we have time for. Huge thanks to our guest, Chip, and to you for listening. This is The Provocateurs Podcast and we’ve been Des Dearlove and Geoff Tuff. Please do join us again soon for another episode of Provocateurs.