It’s Marineau’s job to lead a generation that’s abandoned Levi’s back to the changing room. Last month Marineau announced that the iconic, 150-year-old company is about to stem a five-year slide and begin growing again. It’s about time. Since 1996 Levi’s revenue has been shrinking faster than a cotton shirt in the dryer, declining from $7.1 billion in sales to $4.2 billion last year. The company has been beset by troubles. Some are external, like the proliferation of upstart brands such as Maui Jeans and Diesel. Some are internal, like a complacency that made it slow to spot new trends like the baggy look. Levi’s hired Marineau, a veteran of Pepsi and Quaker, in 1999, to give the private firm a kick in its trademark back pocket. Analysts are impressed with how he’s cleaned up the balance sheet and attacked costs. Now he’s turning his attention to a product turnaround, and he gave NEWSWEEK an early look.
Levi Strauss & Co. has sold pants since 1873, when a pair of entrepreneurial immigrants, Levi Strauss and Jacob Davis, started putting sturdy metal rivets onto the corners of workers’ trousers, which were then called “waist overalls.” Throughout most of the 20th century, the company clothed America. But even as the popularity of denim soared in the 1990s, Levi’s jeans and its newer line of Dockers khakis had become indistinguishable from other brands, so prices fell and margins plummeted. Worse, Levi’s customers were predominantly men, who shop for new pants only when their cherished old pair gets so frayed that they’re better classified as science experiments. The company was also getting strangled by debt and high labor costs at its American factories.
Enter Marineau, most recently the head of Pepsi North America, who sent strong messages to his troops. In one of his first moves at Levi Strauss, the 55-year-old Chicago native added Pepsi to the vending machines. Then he impressed that cola-war mentality on his colleagues. Last October he spotted an employee in the cafeteria wearing Diesel jeans, and fired off an e-mail to the entire company. “You are either for us or against us. If you are going to work here, wear our pants, not our competitors’!” He also went to work renegotiating the company’s $2.7 billion debt with Wall Street, closed 11 U.S. plants and outsourced production to South America.
Marineau’s next stage of the turnaround: re-establishing Levi’s primacy on store shelves. To make that happen, Marineau brought back to the United States Robert Hansen, a 38-year-old Levi veteran who rescued the sagging European operation. His job is to remake Levi’s as a trend leader. This fall the company will introduce new Dockers pants with Stain Defender–they’re treated with Teflon, so liquid beads up instead of soaking through. Fresh lines of men’s jeans will have the low-cut look, like the successful line of pop-princess hip-huggers. (One scandalously low-cut version is called Offender.) For women, low-cut jeans will come in new fabrics and finishes, including one called Mechanic, stained as if worn while working on a car.
Marineau points to other new initiatives that should help the company’s top line. He’s instituting a system to track sales trends in upscale stores like Barneys, and to quickly “cascade” the most popular features down into higher-volume products at mainstream department stores. He’s also targeting the company’s confusing system of styles and sizes (501s, 505s, 527s, etc.)–which he calls “Levi’s hieroglyphics.” “You buy a pair of pants and want to get out of the store,” he says. “You don’t want to hunt and gather.”
For all the newfound optimism at Levi’s Plaza, Marineau still has tough problems. His business remains inordinately concentrated in the men’s market, and it still sells most of its wares in department stores like Sears and Macy’s, as more Americans go looking for discounts at Wal-Mart. And while the Levi’s name is known worldwide, it desperately needs an infusion of cool. “If you’ve been around for the last five years, you know the desirability of the brand has sunk to its all-time low,” says apparel consultant Harry Bernard of Colton Bernard. If Marineau’s bets pay off, the only new lows for Levi’s in years to come will be the suggestive cut of its jeans.
