Levi Strauss & Co (NYSE:LEVI) Q2 2019 Earnings Conference Call Transcript
Jul 09, 2019 • 05:00 pm ET
Thank you. (Operator Instructions) Your first question comes from Matthew Boss with JPMorgan.
Thanks and congrats on a nice quarter, guys.
Charles Victor Bergh
Harmit J. Singh
So Chip maybe can you elaborate on the brand's global momentum? Maybe how you see innovation fueling the next leg of top line growth? And just touch on some of the incremental growth drivers as we think about FLX, Data Analytics, CRM and loyalty?
Charles Victor Bergh
Great question, Matt. First, I like to say this company was founded on innovation and innovation is kind of in our lifeblood and when we're successful innovating. It does drive our business results and that's why, and you've been there, that's why the very first investment we made when I became CEO was the (inaudible) 00:32:4 innovation center right up the street to really send the signal about the importance of innovation. So it is in our lifeblood, Matt, I like to think about it in a couple of different buckets; there is kind of the product bucket, there is the commercial bucket and then, in this new world, there is the digital disruption bucket, which kind of spills over to everything. So it is -- and the digital disruption piece is one of my top agenda items, I really do believe that's got to be something driven from the top from the CEO. So let me focus on that one first, you mentioned FLX that is digital disruption of how we finish a pair of jeans, we use lasers instead of hand-finishing and over time that is going to drive a fairly significant savings in production cost because we're finishing it with machine instead of people and it should over time also deliver some balance sheet benefits from the supply chain and inventory benefits as well.
Today about 25% or so of the Levis denim bottoms business on a global basis is finished with FLX and that should ramp -- the full potential is about half of our total bonds business. And so we should ramp from 25% to that full potential over the next two years or so, so through 2021. The other thing -- we've already announced this and I think you will see it this quarter here in the US, we're going to begin to give consumers an opportunity to personalize or customize their own jeans online using the FLX technology. So they'll be able to go online and design their own jeans and in a couple of days that will arrive in there on there -- on their doorstep will charge a premium for it, it's going to be a really cool experience some of you have had an opportunity to experiment with it yourself, and that's going to roll out, and I'm sure pretty quickly in the United States. And as I said, we're going to premium price that. And another big opportunity area for us is to really take advantage of all the data that we've got. We collect a ton of data that we