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00:00I just want to start by asking you what brings you to Asia and can you tell us a little
00:04bit
00:04about the strength you're seeing in India? Absolutely. Well, first, Paul, thanks for
00:10having me here today. And, you know, we're really excited about the momentum that's happening on
00:15the business. We just came off of reporting another strong quarter of growth, expanded
00:20profitability, giving us the confidence to raise our guide for the year. And Asia overall really
00:26contributed to that growth. It was up 12 percent, a very strong first half. And India and other
00:32markets like Japan are definitely fueling that growth. Asia is a critical part of our growth
00:37story as we look ahead to grow this business to at least 10 billion and beyond. And I've made many
00:43trips to Asia since I joined the company in early 2023, including India, but also across Asia. I was
00:49in Shanghai earlier this week and now in Singapore. And I'm really excited because with half of the
00:55world's population living in Asia, this is a big, big opportunity for Levi's.
01:02Yeah, so India, I think, is now your sixth largest global market after all. Overall, correct me if
01:08I'm wrong, is the largest in Asia. Can you give us any specific insights into India's market around
01:14what products are working, what's not working and where the demand's coming from?
01:19Yeah, absolutely. India is a key market for us. We're about to open our 500th store in India. We
01:27actually have our largest mall store, close to 10,000 square feet, actually, in India. And the
01:34business has been doing really well over the last couple of years and accelerating. I'd say a couple
01:39things in India. And again, I visited that market a few times over the last few years, even last fall.
01:45First of all, the consumer. I mean, the consumer is prime for Levi's. They're younger. They're
01:53optimistic. They like fashion and also like quality and love the heritage of the Levi's brand. I mean,
02:00Levi's is a very big brand in India. And it's one of the markets where we're really known not only
02:06for
02:07our denim bottoms, but really head to toe dressing, head to toe apparel. And I get to see that firsthand
02:13when I visit. And so really across the board, our strategies are working. I mean, big picture for Levi's.
02:19We are undergoing a transformation. We are becoming a best in class, direct to consumer retailer.
02:25This year will be a hallmark year where more than half of our business will be direct to consumer, either
02:31through
02:31our own stores or through online. And we're becoming a head to toe, what we like to say, denim lifestyle
02:38retailer.
02:38When we look at our business in India, we actually are delivering that strategy very well.
02:45You know, we sell about as many tops as we do bottoms. That's the highest we have in anywhere in
02:49the world. And like I said, from a consumer standpoint, they love Levi's. We have top market
02:54share for women's and men's in terms of denim bottoms. And there's so much potential. So while
03:00we're excited about what we've seen to date with the strategies that are in play, there's a ton of
03:04upside. And I'll say in India, but frankly, across Asia. I mean, Asia is only 18 percent of our
03:11business. And when you think about the opportunity in this market with, again, half the world's
03:17population living here, they're younger, they're optimistic, they're looking for fashion and
03:22durability and quality. That's great for Levi's.
03:27So if you feel like Asia is a little bit underserved at the moment, which markets are you looking at?
03:32Which of you identify for some good growth opportunities? Can we expect to see some more
03:36store openings in some countries in the next three to five years?
03:41Yes, absolutely. In fact, we see opportunity really across Asia. So we spoke about India.
03:47As I mentioned, I was just in China a few days ago. And that's a big, big opportunity for Levi's.
03:53It's a very small part of our business today, only a couple percent. But when you think about the
03:58opportunity, again, the population, the desire for fashion, I mean, being in Shanghai, which is such
04:07a fashion hub. And so just upside for us. I was in a pop-up event just the other day
04:14where it was
04:15really a celebration of the tremendous heritage we have. In fact, our company historian was there and
04:21she was doing an event as well as these influencers and how people are really gravitating towards not
04:27only the heritage of Levi's, but everything we're offering head to toe. And I think for brands to be
04:33able to, you know, really hold on to who they are with the deep history. I mean, we've been at
04:38this for
04:38170 years. There's not many brands that can claim that, but also be leaning forward and being at the
04:45center of culture. I mean, one of the really exciting things happening around the world and in Asia in
04:50particular is our partnership with Rose. I mean, she's a global icon. She's got 90 million followers.
04:56She was part of our global campaign that we launched earlier this year. And we are doing
05:01collaborations with her. And she's really helping us accelerate our women's business. You know, for the
05:07company, women's represents now 40 percent, which is significantly up versus where we were just a few
05:12years ago. That's a big area of focus as we talk about becoming a head to toe denim lifestyle brand.
05:18In Asia, women's is only 30 percent. So when we think about growth, you know, you can think about
05:23it from a category standpoint, like tops as part of lifestyle, our underrepresented female consumer.
05:30There's channel opportunities, still many stores that we're going to build across Asia, some which
05:35will own and operate, others that will do with great partnerships and franchise. And we still have a big
05:41wholesale business that we can lean into. So China, India, and I would say Japan and Korea,
05:47Japan has been on a tear. I mean, that business is doing really well for us. It's the most premium
05:54denim market in the world. And it's the most premium expression for Levi's as well. We earlier this year,
06:00last year sometime introduced a new category for us called Blue Tab, which we like to refer to it as
06:06denim luxury. And it's the most elevated Levi's made with, you know, made with the most beautiful
06:12Japanese denim. We're now offering head to toe. It's a very big business in Japan in particular,
06:18but we see that as an opportunity to really take it around the world. And we have launched it and
06:23we're
06:23in the early stages. But for us to operate now and compete in premium denim, again, it presents upside
06:29for the company. Well, you also have to operate and compete in, you know, what is becoming a somewhat
06:35complex geopolitical environment. I mean, particularly with unpredictable US tariff policy,
06:40inflation, concerns around, you know, consumer sentiment as well. How are you adapting your supply
06:45chain around some of these pressures, particularly the tariff environment? Yeah, you bet. Well, you know,
06:52first I would say relative to the consumer, our consumer has continued to prove resilient. I mean,
06:58hence the business results that we've seen the first half of the year. But we always stay really
07:03close. We stay agile. We know that we have to earn their business and their trust every single day.
07:09And for a brand like Levi's in times of uncertainty, that's where consumers go. They will lean into
07:14consumers that they know, trust, are great value, have great durability. And then as it relates to
07:20tariffs and supply chain, I mean, I would just say our teams have done a tremendous job mitigating
07:25the tariff pressures. We still have the tariff headwind in our numbers. And we've been able to
07:32grow our margins despite that through a number of great initiatives that the team has embraced.
07:38From a supply chain standpoint as well, we have a robust supply chain. We're very diversified.
07:44You know, we have deep relationships with our partners over decades. And so that I think that
07:50really positions us well and competitively to navigate whatever headwind is going to come our
07:55way. Is there a headwind or potentially a tailwind from AI as well? And I mean, I'm sure the connection
08:02between AI and the denim business isn't immediately obvious, but it seems to be finding its way in
08:06everywhere at the moment. Is it offering you any opportunities for cost savings or boosting revenues?
08:14Absolutely. I would say myself, the team, our company, we believe in AI. You know, maybe it has
08:20something to do with. We're based in San Francisco and we're close by to many of the innovators in the
08:25AI space. But we we've embraced it early on and we see the opportunity for it to really help us
08:31accelerate our growth. It's an enabler to us. On the one hand, it can help us in the consumer experience
08:37and we're experimenting with AI as it relates to helping our consumers find outfits and outfitting
08:44and even playing with a with a stylist chat bot that our consumers are engaging with. So I see a
08:50lot
08:50of potential in how it can enhance the consumer experience and how it can help us grow. I mean,
08:57lots of processes can be automated with AI. You know, for us, it's an opportunity to help us
09:03accelerate our growth while we also can enhance our profitability. And that's the expectation.
09:09And when we talk about growing our business to 10 billion, that's our aspiration. But we also intend
09:14to expand our margins from what we've got this year, 12 percent to upwards of 15 percent. And AI
09:21through efficiency and automation will help us get there. So we are betting. We're making investments.
09:26We have great partners who are helping us innovate in the AI space.
09:32Michelle, before we let you go, we're going to have a big cricket story coming up later on the show
09:36about just the size of the Indian Premier League. Now, I'm wondering if Levi's has got any tie-ups
09:42with cricket ambassadors or Bollywood stars that's helping boost your business there?
09:48Well, it's a great question. I'm glad you brought it up. You know, I mentioned Rosé
09:52earlier from, you know, these great ambassadors that we work with. And we do that around the world.
09:59So last year, we had a big campaign with Beyonce, who's a global icon. And relative to India, yes,
10:05we've worked with folks like Diljeet and Ali Abat. So they help bring the brand to life. But, you know,
10:12it does start with the incredible brand we have, the amazing product, our teams on the ground who are
10:18engaging with our fans every single day. And then we have these amazing partnerships with the Ali Abats
10:24of the world, who just help bring it to life in a relevant way so that we can connect day
10:29to day with
10:29our fans.
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