Making Strides at Levi's

Business has been tough for the venerable jeansmaker, but not in its low-cost Signature unit. Brand honcho Scott LaPorta explains why

As president of Levi Strauss & Co.'s Levi Strauss Signature brand, Scott LaPorta oversees one of the growth areas at the otherwise struggling San Francisco company. Launched in 2003 and sold in discount stores including Kmart (SHLD ), Wal-Mart (WMT ), and Target (TGT ), the Levi Strauss Signature line has grown beyond jeans to include khaki pants and accessories such as belts and hats.

Domestic sales of Signature products in the most recent quarter, ended May 29, were $75.86 million -- up 2.8% from the prior year, accounting for about 8% of the outfit's total sales.

BusinessWeek Correspondent Louise Lee recently spoke with LaPorta about the brand's progress and prospects. Edited excerpts of their conversation follow.

Q: Overall, how has Levi Strauss Signature performed since it launched?


Our market share in jeans is in the low- to midteens in each segment [men's, women, and children's]. That's slightly ahead of where we thought we'd be.

Our brand awareness is 30%, huge for a two-year-old brand. Repeat purchase indications are strong. With the value shoppers who buy our jeans, when you look in their closets and see the total assortment, they have twice as many Signature jeans as other brands. That's a strong indicator.

Q: How do you make Signature jeans stand out from all the other inexpensive jeans that discounters sell?


We're the premium brand in the discount channel, so we charge a premium! Our opening price for jeans is $19.95 a pair, a 25% to 30% premium over competing jeans. We're adding new layers into the assortment at higher price points.

In 2003, our "core" offering was $20 a pair. In 2004, we added a "trend" offering at $23. Now this year, Levi Strauss Signature Authentics is hitting the [sales] floors at $25 a pair.

Q: How does the Authentics line fit in with what's already in stores?


We want to have a good-better-best assortment and make it inclusive. Our core and trend lines still continue to grow as well.

A "core" guy likes the [core jeans'] regular relaxed fit, and his wife will get him into the $23 trend jeans to go out on Friday or Saturday nights. And the Authentics are even a little more premium in fabric and finish.

Q: How have retailers responded to the upcoming Authentics line?


By putting higher-priced products on the floor, we're providing retailers with a competitive tool to increase their same-store sales. And as we move to higher price points, there's more margin for us to make.

Q: As Signature keeps growing, what's the effect on the Levi's Red Tab lines, sold at department stores such as J.C. Penney (JCP ) and Kohl's (KSS )?


Levi Strauss Signature doesn't cannibalize Red Tab. For instance, we look at sales of Red Tab at stores with a Wal-Mart within a five-mile radius and at stores without a Wal-Mart within five miles. There's no difference in sales.

Q: Levi Strauss Signature started out marketing largely depending on its NASCAR marketing partnership. How does the brand market itself now?


We now have national print ads, our NASCAR-sponsorship marketing, PR efforts, and Internet efforts. We spend evenly across all four. We make a great return on all four from a return-on-investment standpoint.

Q: How is the Signature brand expanding beyond just jeans?


We have shorts and capri pants for women, scooter skirts and capris for girls, and shorts for guys. We're launching plus-sizes for women at 400 Kmart stores in a couple of weeks. Over the summer, we had khaki pants for guys in 500 Wal-Mart stores. Sales of khakis went well, as expected. There's a future for Levi Strauss Signature to be in the casual-wear business, but it wouldn't be fair for me to discuss our plans now.

Before it's here, it's on the Bloomberg Terminal.