Chief financial officers now play a critical role in shaping corporate strategy and positioning organizations to meet challenges — serving as “Chief Future Officers.” Bloomberg’s Emily Chang explores how Levi Strauss & Co. CFO Harmit Singh is steering the iconic apparel brand through the disruptions of the pandemic and towards ambitious goals for sustainability and digitization.
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After 150 years manufacturing a classic American product Levi’s
has a tradition of quality and brand awareness that few

companies can match. Just a few of Levi’s blue jeans and a lot
of High Flyers.

The company’s name is almost synonymous with blue jeans.
But this history offered little protection when the Covid

pandemic devastated global retail in early 2020. All the sudden
most of our stores around the world were closed like that and we

saw our revenues pretty much dry up as the shock of the crisis
subsided and economies began to reopen. Levi’s and its industry

peers stood at a crossroads. I think that at the end of the day
what was really unique for those that took advantage was Covid

was this opportunity for companies to refashion their businesses
for the future.

We are going to emerge from the pandemic a much stronger
company. And now we’re saying okay what is the next five to 10

years look like. This is the question Levi CFO Harmeet Singh
grapples with every day. As CFO the one important thing is to

show you you’re able to connect the dots and always think longer
term I think is critical. Harmeet Singh has lots of dots to

connect. He’s managing the company’s complex advances into
digital technology ensuring that it can meet ambitious

sustainability targets and making sure that all its processes
from sourcing to sales are integrated into this transformation.

He’s an operator and he’s he understands the business at a very
granular level but can also copter up high to 40000 feet and

think about where are we going. That’s why you could call
Harmeet Singh Levi’s chief future officer.

Levi’s literally invented the word pants that would come to be
known as blue jeans. Cotton gin a process for sewing rivets into

denim clothing. Way back in 1873. But that pioneer spirit was
lagging on the financial side of the business. When Chip hired

Harmeet Singh in 2013 when I joined the company eight nine years
ago the balance sheet was a constraint. We were not investing

for growth. We had two billion dollars of debt on the balance
sheet. We were actually spending more money on interest expense

than we were advertising our brand. And one of his first
missions was to turn the balance sheet from a liability into an

asset. If we did that we paid down a billion dollars in debt and
we started reinvesting back in the Levi’s brand. And that’s been

central to the turnaround of the business. Revenues grew
steadily through the decade peaking in 2019 when the company

went public. Levi’s maintained a dominant share of the market
for jeans. Then came the pandemic and by early 2020. All of this

progress was put on pause.
We saw a billion dollars of revenue evaporate that first quarter

of the pandemic because our stores were close our wholesale
partner doors were closed as we got into the pandemic.

We said we’ve got two things we’ve got to manage through the
crisis which is all about preserving cash driving profitably and

communicating with all our stakeholders. But importantly we had
to emerge stronger because the consumer and employee experiences

were changing. What are some decisions you made under pandemic
pressure that you’re really proud of. We pivoted to a new

strategic blueprint. The pivot was on three basic things.
Elevation of the brand

acceleration of a direct to consumer business and diversifying
our product base. A number of brands. We just close a deal and

entered the activist segment that beyond yoga. The other thing
we did was we continue to invest for the long term. So we

invested a lot more capital in accelerating our e-commerce
business. E-commerce is becoming a bigger piece of our business

is profitable today as well as we spend the time ensuring that
we balanced all stakeholders. So for example we took the

unfortunate decision of laying people off but we cut dividends.
We also extended you know our benefits. We introduced paid sick

leave because ensuring safety and health of a frontline staff
was critical. So I think the decisions we were taking were

guided but not only to emerge stronger financially but also
ensuring that our values as a company continue to resonate with

all our stakeholders in the middle of the pandemic. Suddenly
there’s this shift away from skinny jeans and toward mom jeans.

Was this disruption a huge benefit to Levi’s. Because people are
now turning over their wardrobes. They want something new. Yeah

you know done the research. 40 percent of all wear sizes had
changed during the pandemic. Some wind up someone down both for

him as well. So that does mean that you’ve got to go back and
make a change in your closet. And you you tend to

engage with brands that are engaging with you. So I think a
combination of direct engagement with the consumer even during

tough tough times investing in things like growing e-commerce I
think things that will continue to resonate whereas Levi’s on

that path right now to a digital future today. Today visual
ecosystem is about 20 percent of our total business. Very

profitable. We aspire to make this a third of our business. Our
direct to consumer business which includes our stores is about

40 percent of our business is to be half that years ago. We
aspire to grow that to about you know 60 percent or two thirds

of our business. If the analogy is a baseball analogy where we
I’d say we’re bottom of the fourth inning. We’ve got a long

runway for growth. So supply chain disruption commodity costs
this is all putting pressure on the process of bringing anything

to market.
What is the new normal going to be there when it comes to supply

chain disruption pricing issues et cetera. If you think of
supply chain think of two broad buckets. One is sourcing and

second is is commodity and costing on the sourcing side very
early on we say we want put all eggs in one basket. And so we

source across 24 countries and not from any single country to
resource more than 20 percent. You talked about costs you know

given our global buying power. We’ve already negotiated the
first half of the year. A very low single digit inflation

relative to last year. The one thing. Because the brands so hard
has been really resonating the consumers will continue to take

pricing even during the pandemic. The brand today has pricing
far. Levi’s 20 21 full year revenues are on track to match 2019

fulfilling the company’s pledge to emerge stronger from the
Covid crisis we committed in the middle of the pandemic. But

when our revenues go back to pre pandemic levels our margins
would be up more than two points and we’ve now delivered on

that. But with the virus still weighing on consumer confidence
and supply chains and inflation surging around the globe this is

no time for any retailer to relax. As you look forward over here
I think the biggest question. This was going to take the

learnings from the pandemic versus who was just going to feed
back what they did in the past. I think over time you know

because the loans people have had during the pandemic there is
going to be thinking about how to globalize your supply chain.

Do you concentrated on a few countries. Do you diversify. Do you
bring some production home. One of the programs we started a

couple of years ago was Air Flex program is using lasers to
finish your denim product. It used to be done by hand. It is to

be done overseas. But now we bring in the blanks and we finish
it closer to markets. And so we are in the process of expanding

that program around the world. So I think people need to just
think about different ways of doing it. And I believe technology

will play a key role. Coming up. For Levi’s a successful future
means a sustainable future. That’s a challenge. Harmeet Singh is

determined to meet one of the few companies where ESG and
sustainability is the cornerstone offers to digital plant.

That’s next. This is Bloomberg.

Harmeet Singh’s affinity for Levi’s tracks all the way back to
when he was a teenager in India. I had an aunt who coming

overseas and she said what do you want. And I said I want a pair
of Levi’s at an early age. He decided to study finance. I did.

My CPA chartered accountancy with a goal that I want to start my
own CPA form. The allure of entrepreneurship faded when Harmeet

got married and started a family. He took a job as a financial
analyst at American Express in India. If someone is doing me at

that point me you would be working in the US would be CFO of two
large American icons hired and Levi’s take two companies public.

I wouldn’t bet against it. Harmeet Singh first reached the C
suite in the US when he was named Chief Financial Officer of

Pizza Hut. He then took the same role at parent company Yum.
Restaurants after a successful stint as CFO for Hyatt Hotels.

Chip Berg hired him at Levi’s in January 2013. I’ve been very
fortunate been lucky have had great mentors. And you know one

thing has led to the other
throughout their time. Working together Chip Berg and Harmeet

Singh have been partners in a steady push to make Levi’s more
sustainable. First is not something the business started. It’s

been in our DNA as people in the news says woven into our
fabric. Harmeet has been driving a lot of the investments behind

making this company a more sustainable company. Many of these
investments have gone into the Eureka Innovation Lab a research

and development center a few blocks from corporate headquarters.
Progress made here has helped Levi significantly reduce its

greenhouse gas emissions and water use in the past decade. And
now Levi’s has made sustainability a central pillar of its

consumer strategy with a highly nontraditional even
counterintuitive ad campaign by Better Wear Longer.

We had a lot of internal debates about you know it’s the selling
idea by better wear longer are going to reduce consumption. You

know I fundamentally believe that it plays to our strong suit.
It is kind of it almost defines what the Levi’s brand is all

about. We believe because
you know the younger generation the millennials for them you

know interacting and engaging with consumer companies they
aspire to be more sustainable has allowed us to reach out to

newer consumers. So even though people may buy less we believe
they’re reaching out a lot more new consumers. And that’s why it

actually in our view it actually will grow the revenue and grow
profitability while at the same time ensuring you know that our

party is sustainable. We’re doing the right thing for the
planet. The wear longer theme is meeting the moment. According

to research by global data between 2010 and 2020 reshaped
clothing doubled as a share of the consumer closet and could

potentially double again by 2030. Levi’s has put its own stamp
on reconditioning and resale with tailor shops as a feature of

its stores. It allows us to directly engage with the consumer.
We started

the tailor shops in Europe. It was a runaway success and nobody
expects to expanded it around the world. Most of us stores in

the U.S. have it all on next gen stores which are our latest
format have tailor shops. We’re taking the reins in our own

hands. It’s a I think the addressable size of the market is
about 30 billion dollars and we just

entered it. So that’s clearly an opportunity for us.
In 2020 Levi’s issued its first standalone sustainability

report. It covers environmental social and governance issues
outlining programs priorities and principles and setting

ambitious targets for performance.
It will be up to Harmeet Singh and Chief Operating Officer Liz

O’Neill to execute the plans they helped devise. Harmeet and I
worked together a lot on figuring out what is the what’s the

strategic direction how are we going to get there and how are we
going to invest in order to actually make that a reality. What

falls under the CEO umbrella in the C S O umbrella. And where
did those over overlap. Well sustainability reports and through

me. So I have the supply chain as well as the sustainability
team. But nothing happens without the CFO. The CFO is imperative

to this. And honestly right now we’re in such a big
transformation as an industry as we try to transform. We need

the help of the CFO to really help us figure out what are those
focus areas and how do we distort our resources and our

investments to those areas that are going to matter most. Every
year we do a strategic business plan.

One of the few companies where ESG and sustainability is the
cornerstone of us to. Plant and thinking about you you’re saving

all this money in negotiation. Are you going to drop it to the
profitability.

Or are you going to invest for the long term.
Think about this place right. People ask me is this get getting

the payback. I say you can measure this from a payback. If 80
percent of our innovation is coming from here we are building

for tomorrow. You know this is a very easy answer. You’re
getting the payback. And I think that’s the discussion that

happens on a regular basis. It O’Neill showed me how that
discussion is driving. Leave ISE through a major shift from

hardware traditional resource intensive manufacturing processes
to software.

They gave me an iPod and told me to design the jeans of my
dreams.

You can come down here and we all love our damaged and
destructive chains. Yes we can load external damage like an add

damage but that wasn’t even the coolest part. So what do you
customize. It will come to life. OK so we’re gonna see my

damages on there. I guess that’s been happening in real time
like that. A distressed pair of Levi’s that just needs one short

wash to be ready to wear. This technology is already in use and
already delivering results. We’ve reduced the amount of water by

almost 90 percent across most of our product line over the last
10 years saving billions of litres of water. I’m finding new

ways to finish the genes that are just much more sustainable.
How long can you recycle the water for. How long before you have

to dispose of. Well we with the laser finishing that we use it
in many of the factories. We can recycle the water virtually

endlessly. So on the right. These are traditional washing
machines. They use a lot of water. Right on the left is an ozone

driven washing machine. No water. And so it washes the pants.
Exactly. And using this technology all our factories now use

that technology. And if you go back and look at how much water
we have saved since 2011 is approximately 13 billion litres of

water.
Harmeet Singh has taken his commitment to sustainability beyond

his role at Levi’s. He’s a leader among financial executives who
want their work to help protect the future of the planet. Prince

Charles has an organization called Accounting for
Sustainability. He started this probably 10 12 years ago. And

today I am the you know the call chair for the U.S. chapter.
What we’re doing as a group of surfers is we’re sharing best

practices. We engage with investors. We also engage with the SCC
the ISE first as they establish disclosure standards. So I think

you know it’s the least I can do something that’s so important.
Up next Harmeet Singh talks about how sports gives him an outlet

beyond the office but he’s also found a way to make it part of
his work.

My recognition of whatever those hired to Levi’s is ahead for
six awards.

And you know what I tell people is it’s like knocking the ball
out of the box.

And he tells me what skills achieve future officer will need to
succeed. I think listening. Being empathetic.

Building trust by being authentic. This is Bloomberg.

Leave ISE CFO Harmeet Singh love sports. He played basketball
and cricket growing up in India and more recently took up golf.

Why do you love about sports. Are you ultra competitive. Does it
help you relax or decompress. I like to win but win the right

way. But it also gets me to relax because I like to associate a
little bit of downtime watch a game of golf play a game of golf.

Folks see some cricket. So I think a good combination of what
you have created your own award tied to cricket for your team

here at Levi’s. It’s called Hit for Six. Well I tell people is
it’s like knocking the ball out of the box or link it back to

baseball. It’s a home. It’s a homerun. And I give it to folks
who you know go beyond their normal job and make a big

difference. I’m a big believer in recognizing good work because
I think that really helps motivate people motivate teams. And

you know people believed in me and that’s why I’m here. So my
job to believe in people from telling sports in business also

intersected proceeding when Levi’s purchased naming rights to
the San Francisco 49ers new stadium. Although at first he was

blindsided by the deal. That was a week into this role. The
balance sheet was constrained. He walks into my office with his

build brands and he says what do you think of naming rights for
Levi’s Stadium. And I said How much is going to cost. And he

says you know a small sum of 200 million dollars. I said Really.
I got into the wrong company.

We got together and said okay how do you make this happen and
make this a success. And you know the 49ers did well that you

know they had a Super Bowl in a couple of years into it and
everybody goes there. I’d say dresses casually. Hopefully a lot

more casual after the pandemic. But a lot of them are wearing
our product. So it’s really resonates with who we are. A brand

with a 150 year history isn’t going to change its core identity
even after a disruption like the pandemic. But Levi’s like

retail companies everywhere is determined to build lessons from
the last two years into a vision for the future. We have to

sustain what we have emerged out of ensuring that we continue
invest in the digital transformation of the company is critical.

Transforming to digital doesn’t mean abandoning physical retail.
Even though Bloomberg Intelligence sees brick and mortar apparel

sales declining from a 20 19 peak BMO Capital managing director
Simeon SIEGEL says stores still have an important place in the

omni channel mix.
The retail model in the past worked for a reason and it still

does. So disrupting doesn’t mean destroying the consumer doesn’t
wake up in the morning and go. Today it’s going to be a brick

and mortar day or today is going to be an e-commerce day. They
wake up and they go I want to buy a pair of Levi’s. I think what

we’re gonna find is omni channel doesn’t need being everywhere
for everyone. It probably means using everything that you have

to the best of its ability and figuring out how to represent
once you know what you want to be. From sales channels to

sustainability from profit margins to core principles. Harmeet
Singh we’ll be making decisions that guide Levi’s into the

future. So I asked him what he sees when he looks ahead.
What’s the opportunity for Levi’s in the next 10 years that

excites you most. I think you know owning a bigger share of the
closet and it’s not only denim it’s also activewear. It’s not

only bottoms. It’s owning tops. And so diversifying our product
base you know currently we have you know a big brand in Levi’s.

We’ve just been beyond yoga. And the question is can we make the
company with a company that has more portfolio brands longer

term. What’s the challenge for Levi’s in the next 10 years that
keeps you up at night. I’d say you know going through different

crises because there’s a you know living in a very uncertain
world. I think dealing with issues like climate I would say

cyber security
and the dangers offered.

I’d say ensuring that we balance you know all our stakeholders
without disappointing any as well as growing

the market cap of the company which we’ve done successfully over
the last couple of years. So quite a few things are keeping you

up at night. Yeah. You know I’m a 24/7 person and I love
thinking about ISE here for the one important thing is to show

you you’re able to connect the dots and just making sure we’re
able to do that

and always think longer term I think is critical. How do you see
your role as CFO changing in the next decade. I’d say

having a broader influence are a lot many things. I think the
desire to. Unlock not only shareholder value but also

stakeholder value I think becomes important.
I think the desire to build

a very successful team a talent that is diverse and is making an
impact through the organization I think is critical. What is a

skill set skill area that you think every CFO will need to heart
in the next decade. I think listening being empathetic. Building

trust
by being authentic

I think are going to be really critical skills that he offers
and probably need longer term. What advice would you give to a

CFO who got promoted today. Learn the business. Build your
relationships. And don’t unleash the playbook that you grew up

with. Make it relevant to the circumstance in this situation
because a lot of times people just come with a playbook and say

OK we’re going to roll that. Don’t do that. Think longer term
and build your equity but with a longer term perspective.

Look forward not backward and don’t rely on what worked before.
Not what you’d expect from a steward of an American icon but

exactly what makes Harmeet Singh Levi’s chief future officer.
I’m Emily Chang. This is Bloomberg.