Why Levi’s CFO backed a Beyoncé ad campaign

Levi’s announced the Beyoncé collaboration last week, saying the Grammy-winner will star in “Reiimagine,” a campaign inspired by the legacy of the Levi’s brand. “Denim on denim has often been seen through a male lens, so this reimagining campaign, which celebrates the iconic female perspective, is important to me,” Beyoncé said in a statement. The campaign began on Sept. 30 and will consist of a series of episodes that reinterpret several of Levi’s most iconic advertisements, bringing them into the modern era. 

Beyoncé is someone who has “always stood in the center of culture,” Singh told me. “I think it is a great partnership as she’s been a supporter of the brand over the last couple of decades; it’s a win-win for both Levi’s and Beyoncé.”

Levi’s new campaign featuring Beyoncé follows the retailer receiving an unexpected endorsement in her album, Cowboy Carter, released in March, with the single, “Levii’s Jeans” featuring Post Malone. 

So did Beyoncé’s song help boost business results in Q1? It’s difficult to determine the impact, Singh told me. But he did point out that sales of Levi’s 501 jeans grew 11% in Q1, and continues to grow, and the women’s business was up 11% in Q3. “I think the partnership with Beyoncé will help scale it to the next level,” he said.

CFO-CMO partnership

Finance chiefs have traditionally viewed marketing as a cost center rather than a growth center. Over his career working at Levi’s and at other large companies like Yum! Brands and Hyatt Hotels, Singh has become a supporter of good brand and product advertising. “I have seen it resonate and drive business results,” he said.

Kenny Mitchell, SVP and global chief marketing officer of the Levi’s brand, who joined the company in 2023, played a big role in securing the new Beyoncé ad campaign. The endeavor will support the “growth of our women’s business as the definitive denim lifestyle brand,” Mitchell said in a statement.

Singh recalled a conversation he had with Mitchell earlier this year following the release of the single, “Levii’s Jeans.” 

“I remember him catching me and saying, ‘Harmit, Beyoncé has released this song and we can build on that momentum, will you support it?’” Singh recalled. The two met and Mitchell shared his ideas. “We both respect and trust each other,” he said.

Singh and Mitchell conferred with Levi’s CEO Michelle Gass as well as others including Karyn Hillman, chief product officer, and Dawn Vitale, chief merchandising officer, in order to make the campaign a reality. Levi’s is betting this initiative will lead to higher traffic in stores, so they’ve worked to make sure the products are available globally. 

Levi’s reported its Q3 earnings on Oct. 3. Sales at Levi’s brand were up 5% globally, the highest revenue growth in two years. Beyond Yoga was up 19%. Net revenues of $1.5 billion were flat, however, and below Wall Street’s expectations. Sales at Dockers were down 15% for the quarter, and Levi’s is weighing a possible sale of the business. 

As chief growth officer, Singh said a big focus for him is growing the direct-to-consumer (DTC) business—selling products directly to consumers without third-party retailers or wholesalers. In, Q3, DTC net revenues increased 10% on a reported basis and 12% on a constant currency basis, and it’s 44% of Levi’s total revenue. The Beyoncé ad campaign will be activated across more than 3,000 DTC touch-points and throughout e-commerce channels, according to Levi’s.

CFOs use a variety of metrics to measure a company’s performance. And Singh, also told me that he has a new one—gross profit dollars vs. selling, general, and administrative expenses (SG&A). “Are your gross profit dollars growing at a faster pace than your SG&A dollars?” he said. It’s becoming a lot more relevant as Levi’s launches new products, Singh said. 

Sheryl Estrada
sheryl.estrada@fortune.com

The following sections of CFO Daily were curated by Greg McKenna

Leaderboard

Marcus Sanford was named CFO at PrizePicks, a daily fantasy sports operator. Most recently, Sanford was CFO of Blizzard Entertainment, where he oversaw both finance and operations teams while continuing to serve as deputy CFO to the parent company Activision Blizzard. Before that, he spent over a decade as a senior finance leader at Activision Blizzard leading corporate finance teams. 

George Burdette was named CFO of Verde Clean Fuels, Inc. (NASDAQ: VGAS). Prior to joining the company, Burdette served as CFO of Arbor Renewable Gas, and CFO of Itafos, a publicly traded, global phosphate fertilizer producer. 

Big Deal

Debt from nonbank lenders is less likely to appear on the books of private companies seeking bankruptcy protection in U.S. courts this year, according to an S&P Global Market Intelligence report.

After spiking to 4.3% of all private companies seeking bankruptcy protection in U.S. courts in 2023, the share of those companies with a recent private credit loan fell to 2.3% through Sept. 16, 2024. Although bankruptcies represent only a portion of all loan defaults, they provide a partial picture of the stress facing private companies. However, the low prevalence of nonbank loans among U.S. private companies filing for bankruptcy may also “reflect the flexible approach private credit lenders take to distressed situations, M. Shams Billah, leader of the private credit team at law firm Barnes & Thornburg, told S&P Global. “They’re willing to work things out so you never get to bankruptcy,” Billah said.

Going deeper

“How to Reduce the Risk of AI and Enhance Its Societal Impact,” a new article in Wharton’s business journal, highlights visiting scholar Cornelia Walther’s research that makes the business case for “prosocial AI” and how it can benefit society while minimizing ethical risks.

Overheard

“Today, companies are moving away from the rigid job descriptions and educational requirements of the past, shifting instead toward a skills-based approach that prioritizes evaluating and training employees for the specific abilities they need to complete their assigned tasks and projects.”

—Bernardo Nunes, a data scientist who specializes in AI transformation at Workera, writes in a Fortune opinion piece