Levi Strauss announces strategic review of Dockers brand including sale
5:05 pm Wednesday, October 02nd, 2024
(Reuters) -Levi Strauss said on Wednesday it was considering a sale of its underperforming Dockers brand, known for its chinos and khaki clothing.
Shares of the denim maker were down nearly 8% in extended trading after the company missed quarterly revenue expectations and announced a strategic review of Dockers.
Levi is in the midst of a strategy to operate with tighter assortment focusing on core denim brand and producing apparel and accessories aligned with current consumer trends.
The company has already laid out cost cut plans aimed to bolster profits and get rid of businesses that have not fetched much such as the Denizen brand and its footwear category in some regions.
It had also reduced its corporate workforce and consolidated operations in Europe as part of the cost cutting efforts.
This helped the company post third-quarter adjusted profit of 33 cents per share, topping expectations of 31 cents apiece, according to analysts’ estimates compiled by LSEG.
As part of the strategic review process, the company has retained Bank of America as its financial adviser and has not set a deadline or definitive timetable for its completion.
Levi has flagged that the higher-end consumer was seeing incremental signs of pressure in the U.S. and that consumers in Europe were also being highly cautious, hurting sales of its apparel – mainly in the Dockers brand.
Sales of Dockers saw a 15% decline in the third quarter. The brand contributed about 5% to the reported quarter’s revenue of $1.52 billion, which missed analysts’ estimates of $1.55 billion.
“I think what Michelle Gass, the CEO of Levi’s is doing is enhancing the focus on the core brand that generates the majority of of revenues,” said Dana Telsey of Telsey Advisory Group.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Alan Barona)
