Levi's Gap Case Study

Financial comparison

Levis Gap TJX revenue growth 2% 3% 7% ROA 7% 16% 21% Gross Margin 49% 38% 28% Net Margin 2% 8% 8%
ROI 135% 29% 39%
P/E 11% 13% 21%

In the comparative analysis it is clearly indicative that though gross margin of levis is good it is going down on net margin. Clearly costs have to be cut down at each and every redundant part and lean structure should be created A global productivity initiative to be designed to streamline operations and fuel long-term profitable growth. Should implement the global productivity initiative, which will continue to be implemented with a focus on redesigning business processes and identifying opportunities to reduce costs, increase efficiencies and further

The cotton pants appealed to older customers, whose expanding waistlines didn't fit into traditional jeans any more. Sales of Dockers alone came to $1 billion by 1994, and Dockers represented almost 30 percent of Levi's domestic sales. However, this was only one part of the success of the newly private company. CEO Haas, along with Thomas Tusher, head of Levi's foreign operations, transformed the company's overseas markets. In the 1980s, Levi's had diversified its product in Europe into dozens of unrelated lines. Foreign operations accounted for only 23 percent of sales in 1984. Tusher and Haas moved to concentrate foreign sales on the classic 501 jeans, and positioned the pants as a high-priced, prestige product. The company began selling its jeans at posh boutiques in Europe and Japan, at prices more than double the U.S. price. By 1992, foreign sales represented close to 40 percent of the company's revenues, and over 50 percent of

Levi Strauss spent $230 million on advertising in 1992, in a campaign to add glamour to its old stand-by. Levi's jeans, which were being sold at lower-end department stores like J.C. Penney and Sears, Roebuck began to appear in Macy's, with a considerably higher price tag. The company also began to open its own stand-alone jeans boutiques. The flagship store in Manhattan opened across the street from Bloomingdale's in 1993. Standard 501 jeans there cost $47. Of course in Europe, the price could be over $80. The same pair of pants retailed at these drastically different prices depending on where it was bought. Earnings were $155 million on the average in the 1980s. By 1990, earnings stood at $251, and the next year increased to $361. The next two years each added a hundred million also, until by 1995 the company earned over $700