SAN FRANCISCO — Can the company that invented blue jeans as Americans know them today regain its position as the leading innovator in the denim category?

This story first appeared in the June 13, 2002 issue of WWD. Subscribe Today.

That’s the challenge Robert Hanson, president of the Levi’s brand in the U.S., is giving his firm. “It is essential that we position the company as a denim jeans innovator,” he said in an interview this month at the company’s San Francisco headquarters. Levi’s next big innovation, to be Levi’s: Playing to Type

unveiled to buyers in New York next week and launching for spring 2003 retailing, is Type One jeans, a style of dark denim jeans with brightly colored stitching, oversized pockets and other exaggerated details that Hanson called “a concept that we believe will revolutionize the look of denim on the street.”

The style draws on Levi Strauss & Co.’s 149-year history. For instance, curved seams on the hip pockets are a nod to the days when pocket stitching had to curve around the concealed rivets that held pockets on rather than straight as they are now. But the design is intended to be as much of a departure from the brand’s current basic looks as was the Engineered Jeans line, which Levi’s launched for mass distribution in the U.S. in fall 2000.

But Hanson clearly understands that innovation is not enough to keep Levi’s healthy. The company’s sales have slumped for the past five years and he recognizes that the only way to turn the top line around will be to develop something new that will also sell.

He’s set a high sales target for Type One, and for the series of breakthroughs he hopes will follow.

“Any primary innovation has to have the potential to be at least 10 percent of turnover within 18 months time,” he said.

Levi’s last big innovation — Engineered Jeans, which featured ergonomic tweaks such as lower pockets and twisted seams, took off in Europe and Asia, but never achieved the sales figures the company had hoped they would in the U.S. Still, Hanson — who returned to Levi’s U.S. operations last summer after a three-year stint as the head of the brand’s European operations — said he thinks Type One will do better in the U.S.

“The reason Engineered Jeans was not successful in the U.S. was not because the product was not right, but because we did not execute the introduction right here,” he said.

Hanson has reason to have strong feelings about the fate of Engineered Jeans in the U.S. The style was developed by Levi’s Europe on his watch and grew to represent more than 10 percent of the brand’s sales in that region, as well as in Asia.

Sales of the Levi’s brand in Europe for the fiscal year ended Nov. 25 came to $973.7 million, while sales of the brand in the Asia-Pacific region came to $319.4 million, according to recent filings with the Securities and Exchange Commission.

Sales of the Levi’s brand in the Americas region — the bulk of which are sales to the U.S. market — came to $1.94 billion last year. While Hanson declined to give a sales projection for the new concept, his 10 percent target suggests that he expects Type One to be approaching the $200 million mark in sales by 2004.

Hanson said he believes Levi’s made a few mistakes in launching Engineered Jeans to the U.S. that can be avoided in the Type One launch. He said he believed Engineered Jeans were overdistributed and overpriced in the U.S.

Type One jeans are currently being tested at Levi’s-owned stores and the Levi’s Red subbrand, where the idea was developed, plans to begin shipping a premium version of the jeans priced at $145 and up this fall.

But by spring, Hanson plans to be selling Type One styles to fit a wide variety of budgets, from a $35 retail version for chain stores to styles costing more than $95 at premium boutiques.

Hanson said he believes Levi’s will be able to introduce the same idea at a wide range of price points simultaneously by using higher quality fabrics and more fashion-forward design details on the pricier styles.

“It’s a matter of structuring the approach,” he said, noting that he didn’t believe Levi’s could afford to follow the more common strategy of allowing the new design to trickle down to lower price points.

“This market works too rapidly right now. If I do something like that, we will make it too easy for our competitors” to knock off the style, he said.

Hanson disagreed with the suggestion that Engineered Jeans’ slower sales in the U.S. were evidence that American jeans consumers are less interested in forward fashion than their counterparts overseas.

“I think that’s a fallacy,” he said. “The single greatest revelation I’ve had is that the American consumer is every bit as style-driven and style-aware as the European market.”

Observers said given Levi’s continuing sales slump — management has already warned they’re expecting 2002 to bring a sixth straight year of sales declines — Levi’s has good reason to move aggressively. Revenues for 2001 came to $4.26 billion, well off the firm’s 1995 peak of $6.7 billion. Last year Levi’s earnings fell 32.4 percent, to $151 million. The privately held firm discloses its financial results because it has publicly traded bonds.

“Levi’s must do something and do a strong something,” said consultant Andy Jassin, of the New York-based Jassin-O’Rourke Group. “Very few companies have ever lived as long as Levi’s has without having to reidentify themselves.”

Jassin, who had not seen the Type One jeans, agreed with Hanson’s assessment that the Engineered Jeans launch had been poorly marketed.

“Design needs communication. Brands need communication. I don’t really believe that they communicated it well,” he said. The key to Type One’s success, he said, would be how well the idea was presented: “They’re in a position where they have to show consumers and retailers that they’ve taken their licks and are willing to go forward and work to the marketplaces they serve.”

Working to develop Type One is not the only change Hanson has made to Levi’s U.S. operations since the company’s president and chief executive officer, Phil Marineau, called him back from Europe. He named Caroline Calvin, who served with him in Europe, to the new post of creative director for the Levi’s brand.

Calvin has worked to make sure the separate design teams at Levi’s core business, as well as the designers at the high-end Levi’s Red and Levi’s Vintage Clothing sub-brands, more closely coordinate their activities.

“The designers were very siloed in their business accountability” prior to her taking the job of creative director, Calvin said.

She has also encouraged the designers to spend more time combing through Levi’s archives of jeans, which include styles dating back to the 19th century, to help them develop new ideas that are still in keeping with Levi’s heritage.

“We’re going back to all the very good looks of dead stock,” she said. “It’s important to push boundaries, but it’s also important to know what your limits are.”

Hanson has high expectations of the Levi’s Red and LVC designers, who respectively focus on silhouette and finish.

“We’re using those businesses as labels for innovation that we can quickly commercialize,” he said.

Hanson said his plan to roll out regular design breakthroughs plays into a broader goal of recharging the jeans business: “The challenge is to decommoditize the category.”

Francois Girbaud’s Reality Check

“I’m not interested in fashion,” said Francois Girbaud in an interview at his town house on the east side of Manhattan. “Couture as it was in the old days, it does not work anymore.”

While his disinterest may be somewhat of an exaggeration — he’s not throwing away his sketchbooks anytime soon — this is the designer’s way of explaining his decision last month to take a controlling position in his U.S. and Canada licensee I.C. Isaacs & Co.

As reported, Francois and Marithe Girbaud, through an investment arm, bought a 40 percent stake in Isaacs and expect to control its board by the end of the summer.

“I don’t want anymore to be just a designer with a bureau de style and the licenses,” he said late last month.

Rather than focusing his efforts on his high-end sportswear collections, the designer is getting more involved in day-to-day production of all his lines, particularly the U.S. jeans line, which last year racked up $70 million in sales.

“When you are a designer, you want to see people wearing your designs. It’s not just that you’re right and people are copying you two years later,” he said. “If you take a profit, it’s better.”

Steffan Ahrenberg, a financial adviser to Girbaud who last month took a seat on the Isaacs board, said he plans to work with the designer to put solid central management behind the Girbaud brand worldwide.

“The plan is to really restructure the Girbaud business to be a real business,” Ahrenberg said during the interview.

He described the purchase of the Isaacs stake as an important first step that will allow the company to expand its brand into other product categories in the U.S. and abroad. The designer has already licensed the rights to sell the brand in Mexico and Latin America to Kaltex, a major Mexican denim mill and jeans maker.

For Girbaud, the shift to having a more centrally managed company means taking a more practical approach to design — he recently joined Arnot and Gladstone on a sourcing trip to Hong Kong, where they discussed details of things like production and costing.

“We want to have the right price,” Girbaud said.

Managing the business more thoughtfully will also mean being sure that consumers are ready for his new ideas, he acknowledged.

“Two years before [consumers are ready for a new look] is too early,” he said.

He’s also starting to temper his approach to some fashion trends. He cited creased denim as an area where he is now experimenting that would have aroused intensely negative emotions in him a few decades ago.

“My generation,” he said, “if my mother made a crease in my jeans, I would surely kill her.”

Landlubber Setting Sail

In his first solo voyage in branded jeanswear, Steven Rosen is relaunching the Landlubber line of women’s jeans.

The brand, which dates back to the Sixties and Seventies, produced low-rise jeans. It faded from the scene decades ago, but 10 months ago Rosen bought 700 vintage samples and the rights to reproduce garments with the Landlubber name.

The first collection, which is slated to hit stores in September, includes a line of denim jeans, skirts and dresses. The rises are low, between 5 and 7 inches, and most of the styles are vintage-inspired flares, Rosen said. He also plans to add logo T-shirts. In November, he hopes to launch a men’s line.

“Women are much more athletic today than they used to be, so the fits have been adjusted and I want the washes to look clean, without too much whiskering,” he said. Rosen worked at his family business, Rosen & Chadick, a Manhattan fabric store in business for more than 50 years, until eight years ago, when he left to work in the private label business and then went to search for his own project. He knew the Landlubber name from his older sister, Shelly, who often wore the jeans in the Sixties.

“I grew up around fabric, so I have always had a passion for it,” he said. “But I really have a passion for starting this business, it’s a dream of mine.”

Landlubber’s wholesale range price is between $40 and $55 and Rosen said he expects to reach between $8 million and $10 million in sales volume the first year.

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