Upstarts Challenge Blue-Jeans Industry’s ‘Mighty Threesome’ Levi Strauss, Guess, Vf Corp. Face Flood Of New Competition

Sam Norris stood on a subway platform in midtown New York, nearly swimming in his baggy pants, ticking off his favorite brands of jeans. “I like Guess,” said Norris, 18, a college student. “Tommy Hilfiger is cool. JNCO are nice; they’ve got the baggy look.”

And his opinion of Levi’s - once as essential to college life as strong coffee, milk-crate bookshelves and Cup-a-Soup? “Uh, no,” Norris said. “Levi’s are sort of, I don’t know, outdated or something.”

Norris had just uttered the one word guaranteed to make executives at Levi Strauss & Co. cringe. In the ever-evolving world of blue jeans, appearing outdated is anathema.

And Levi Strauss, along with VF Corp. and Guess Inc., the other two biggest purveyors ofthe most fundamental fixture of American wardrobes, is finding its market invaded by hotter, more fashion-conscious manufacturers. After years of growth, their total market share shrank last year by more than three percentage points.

In the past two years, a host of new players has stormed onto the blue-jeans scene, producing everything from the wider, funky look that appeals to teen-agers to more stylish cuts that older folks feel comfortable wearing to work on dress-down Fridays.

And while the industry has always attracted upstarts - Guess grew from one style sold at Bloomingdale’s in 1981 to a $486 million business - what is different this time is the sheer volume of the competition.

It is less a challenge than a siege. Fashion houses, including Tommy Hilfiger, Calvin Klein, Mossimo, Ralph Lauren and Donna Karan, have all spewed out new designs. A cottage industry of tiny companies concentrated in Los Angeles has sprouted up, offering offbeat cuts and zany touches that younger consumers love.

And two of the biggest buyers of mainstream brands, J.C. Penney Co. and Sears, Roebuck & Co., have come out with their own wildly popular lines.

Further, the mighty threesome of denim of the past decade are clearly hurting. San Francisco-based Levi Strauss, a division of Levi Strauss Associates, recently announced that it would lay off about 1,000 people to save $80 million, largely because sales are growing more slowly than costs.

VF, with headquarters in Wyomissing, Pa., maker of the Lee, Wrangler and other brands and the United States’ No. 1 jeans company by sales, is consolidating its buying and decreasing the number of employees in some divisions. And Guess, based in Los Angeles, has turned its focus more to its other apparel and to its international business.

All three are fighting to hold onto their customers. Josephine Esquivel, an apparel analyst at Morgan Stanley, calculates that VF’s share of the jeans market fell to 27 percent last year from 30 percent in 1995. Guess’ portion declined slightly to about 10 percent, and Levi’s stabilized or may have declined a bit at 20 percent after years of increasing its slice of the jeans pie, which grew 8 percent last year to $10.6 billion, according to NPD Group, a market-research firm in Port Washington, N.Y.

The major jeans companies insist they are doing just fine. “We have sold more Levi’s brand than ever last year in the U.S. market,” said Gavin Power, a company spokesman for Levi Strauss. “That said, competition is more intense than it has ever been.”