Anderson to Take Reins as Levi’s CEO

Levi Strauss & Co.'s board wasted little time in naming John Anderson to succeed Phil Marineau as president and ceo of the jeans giant.

NEW YORK — The Levi Strauss & Co. board wasted little time in naming John Anderson, former head of the denim giant’s Asia-Pacific division, to succeed Phil Marineau as president and chief executive officer.

The San Francisco-based company said on Monday that its board met last Thursday — seven days after Marineau announced his retirement — and accepted Marineau’s recommendation that Anderson take the reins. He will take over on Nov. 26.

“John has consistently delivered exceptional results in various leadership roles worldwide and has a tremendous following in the company,” Marineau said in a statement. “John is keenly aware of what it will take to continue to build our brands and businesses globally.”

Anderson, 55, a 27-year veteran of Levi Strauss, is the only executive reporting to Marineau, who predated his arrival in 1999. He was on vacation Monday and unavailable for comment. Anderson had established a productive relationship with Marineau, working with him over the last year, for example, to help find a new head of the company’s languishing European business.

“I’ve worked closely with Phil on our business plans over the last few years and we’re completely aligned on our strategic path,” Anderson said during the company’s conference call with analysts last week to discuss quarterly results.

Strong U.S. sales boosted Levi Strauss’ results in the second quarter. Earnings for the three months ended May 28 shot up 50 percent to $40.2 million, compared with $26.8 million in the same period a year ago. However, the improvement was largely the result of a one-time income tax benefit stemming from a change the company made in the ownership structure of some of its foreign subsidiaries.

U.S. sales of the core Levi’s brand and its Dockers division prevented a downturn in Europe that has persisted since early 2005 from weighing too heavily on results. Revenues for the quarter fell 0.9 percent to $953 million from $961.6 million in the year-ago period. Licensing revenue dropped 9 percent to $16.3 million from $18 million. Sales slipped 0.7 percent to $936.7 million from $943.7 million.

For the first half, earnings rose 26.9 percent to $94 million from $74.1 million. Revenues fell 3.4 percent to $1.91 billion from $1.98 billion. Sales declined 3.7 percent to $1.88 billion from $1.95 billion.

This story first appeared in the July 18, 2006 issue of WWD.  Subscribe Today.

Total sales were $4.12 billion for the most recent fiscal year, which ended Nov. 27.

Anderson’s appointment came earlier than expected, analysts said. Carla Casella, a high-yield retail and consumer analyst at J.P. Morgan, said she and other analysts assumed that Anderson’s promotion to chief operating officer on July 6 would be the start of a six-month trial period.

“They probably didn’t want the uncertainty in the market and they probably wanted somebody to be accountable,” Casella said.

She believes Anderson is inheriting a much stronger company than Marineau did in 1999. However, she said much of that stems from the restructuring plan of Marsal & Alvarez, the turnaround specialists hired in December 2003 to cut costs and reduce Levi Strauss’s more than $2 billion debt.

Marineau has described Anderson as the leader to take Levi’s into a growth mode. Casella believes this will be difficult given the size of the company and the maturity of the denim market.

“He sounds a lot more like an operations guy than Marineau was,” Casella said. “If they need to go into growth mode, you’d think they’d want a marketing guy, which Marineau was.”

Europe will be the key to success for Anderson, Casella said. “He’s got to get his arms around Europe because that’s what people are most worried about.”

Brian Hogan, president of Modamood, New York, the wholesale distributor for Replay jeans, said the timing is right for a change at Levi Strauss.

“If this person executes the right ideas, this could be really huge,” Hogan said.

A high-end luxury collection, created through updating and modernizing styles from the Levi’s archives and selling for between $250 and $300, would elevate the brand overall, he said.

“Go back to the archives, start using Japanese denim and real indigo washes,” Hogan said. “Modernize the old with new and that could be a huge model for them. That would take the bottom brand, the classic 501 and elevate it.”

The company also announced that five of the 14 board members stepped down as of Thursday. Angela Glover Blackwell, Robert Friedman, James Gaither, Miriam Haas and Walter Haas have relinquished their seats on the board as part of what the company said was a plan to reduce the board’s overall size.

“We are taking this action now in line with current corporate best practices, which for us means a smaller board and a higher proportion of non-family, independent outside directors,” said Bob Haas, who is considered the company’s “non-executive” chairman.