Retail industry insiders said Levi Strauss & Co. ( NYSE: LEVI ) pulled off a bit of coup by bringing in Kohl's CEO Michelle Glass to take on the position of President and put her on a path to replace current CEO Chip Bergh within 18 months. However, the stock is trading down in late action on Tuesday with investors not reacting positively to the development.
Weighing in on the C-suite news, Bank of America analyst Christopher Nardone thinks Gass is entering a better situation at LEVI given the various distractions and challenging structural backdrop facing the department store channel.
"Gass' experience at KSS makes her a good option to take over for Bergh given her track record of working with vendors (like LEVI) and direct-to-consumer experience (includes implementing the Kohl’s/Sephora partnership). Her experience at Starbucks shouldn’t be overlooked, where she brings international experience (roughly 40% of LEVI revenues) and helped launch the Starbucks loyalty program."
The firm kept a Buy rating on LEVI with the CEO switch not expected to be a thesis changer for the stock. BofA anticipates business as usual for LEVI, although it is still seen facing a challenging road ahead over the near term given the tough macro backdrop and international. Looking past the macro, inflation and FX headwinds, LEVI's is called well positioned to continue taking market share and emerge as a stronger brand exiting the environment.
Shares of Levi Strauss ( LEVI ) were down 4.20% at 3:05 p.m. and near their session low. Some traders have speculated that algo trading on a CEO headline could be a factor.
The dividend yield on LEVI is over 3.1% after the 2022 sell-off.
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Levi Strauss is defended at BofA with new CEO called the right pick