Levi's CEO Chip Bergh replaced 9 of 11 direct reports in 18 months to reset the culture
New CEO Chip Bergh swapped out 9 of 11 direct reports in his first 18 months; by 2017 Levi's posted its best sales growth in a decade with debt down to $444M.
What was changed
When Chip Bergh reached Levi Strauss in September 2011, the 170-year-old jeansmaker was drifting: nearly $2 billion in debt, annual sales down to around $4.1 billion from a $7 billion peak in 1997, and a brand young shoppers were dropping for Gap and Seven for All Mankind. Performance had been erratic for over a decade, with revenue and profit never rising together. By his second day, Bergh later told CNBC, he had concluded that refreshing the leadership team was the way to turn the stale company around.
He moved fast. Within a year he had fired more than half of his executives; of his 11 direct reports, 9 were gone within the first 18 months. 'The easiest way to change the culture is to change the people,' he said. Looking back in 2023 as his tenure ended, he called the slow cases his biggest regret: 'We lost some because I held on to somebody longer than I should have' — the business lost strong leaders because he acted too slowly on a gut feeling that something was not right.
The leadership reset underwrote the commercial recovery. In 2017 Levi's recorded its highest sales growth in a decade and its debt fell to $444 million, the lowest since 2000; between 2017 and 2019 revenues grew 18% and earnings per share about 35%, and the stock peaked near $30 in 2021 against about $17 in 2017. Bergh credited the team rather than himself: 'I am just the orchestra conductor and have built an amazing team around me.'
Why it worked
Bergh diagnosed the stale culture, not the products alone, as the drag on an erratic business, and leaders set that culture.
Speed protected the turnaround: hesitating on underperformers cost the company some of its strongest leaders, as he learned the hard way.
A rebuilt executive team could then carry the brand revival that restored growth and eventually took Levi's back to the stock market.
What can be applied
Culture change starts with people change: a new leader who acts quickly on instinct about the wrong executives keeps the best talent, while waiting costs exactly the people you hoped to keep.
Aftermath
Bergh ran Levi Strauss for about 13 years. In 2023, with the stock near $13 and the company cutting its profit outlook after a wholesale slump, he reflected on the regret in interviews as he handed over to Michelle Gass, the former Kohl's chief who joined in January 2023 and was set to take the top job in May 2024 after shadowing him.