Levi's Gold Rush

In an era of acquisitive conglomerates and breathless corporate mergers, San Francisco's Levi Strauss & Co. is something of an anomaly. It is a privately owned, family-controlled company that has become successful almost entirely by internal expansion. Just how successful became known only last week. Issuing the first public financial report in its 119-year history, the behemoth of blue jeans announced that it earned $12.1 million in 1968 on sales of $196.8 million. That record makes it one of the nation's half-dozen biggest apparel manufacturers.

The disclosure was prompted by a Securities and Exchange Commission requirement that large privately held firms issue such information if they have more than 500 shareholders. Levi Strauss now comes under that ruling because it has been making a growing number of its employees eligible for the company's employee stock-purchase program. About two-thirds of its stock is held by 43 family members and trusts, with the balance in the hands of 480 employees. The shareholders have benefited from expansion that has doubled sales every five years since 1945. A $3,700 investment made in Levi Strauss two decades ago is today worth $60,000.

Something Basic. The business was founded by Levi Strauss, a Bavarian peddler who followed the gold rush to California in 1850. He saw a demand for trousers strong enough to withstand the rigors of mining. Using bolts of tent canvas, he devised what quickly came to be known around San Francisco as "those pants of Levi's." Over the years, denim replaced canvas, and Levi's acquired their distinctive indigo-blue color and low-slung design. Strauss, a bachelor, died in 1902, leaving the company to four nephews.

Before World War II, Levi Strauss was a $10 million-a-year firm with operations largely west of the Mississippi. After the war, it moved eastward. Then, recalls Walter Haas Jr., 53, a great-grand-nephew of the founder and the firm's president since 1958, "we did something very basic. We began concentrating on the teen-age market." As its youthful customers grew older, the company kept their trade by bringing out "white Levi's" and later a full line of men's casual wear. Last year it introduced "Levi's for gals," a line complete with miniskirts, culottes and shirts.

Levi Strauss owes part of its growth to a willingness to gamble that Haas insists has been possible only because the company is privately held. Possibly the boldest move occurred in 1964, when the company became one of the first to manufacture permanent-press clothes, which it now sells in 60 countries. The company intends to keep its ownership concentrated. Whenever an employee leaves, he is required to sell his stock back to the company.

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