Levi Strauss is mulling the sale of its underperforming Dockers brand, known for its chinos and khaki apparel.
Shares͏͏ of͏͏ the͏͏ denim͏͏ maker͏͏ fell͏͏ nearly͏͏ 8%͏͏ in͏͏ extended͏͏ trading͏͏ yesterday͏͏ after͏͏ the͏͏ company͏͏ missed͏͏ quarterly͏͏ revenue͏͏ expectations͏͏ and͏͏ announced͏͏ a͏͏ strategic͏͏ review͏͏ of͏͏ Dockers.
Streamlining͏͏ Strategy:͏͏ Focus͏͏ on͏͏ Core͏͏ Denim͏͏ Brand
Levi͏͏ is͏͏ implementing͏͏ a͏͏ strategy͏͏ to͏͏ streamline͏͏ its͏͏ offerings,͏͏ concentrating͏͏ on͏͏ its͏͏ core͏͏ denim͏͏ brand͏͏ and͏͏ producing͏͏ apparel͏͏ and͏͏ accessories͏͏ that͏͏ align͏͏ with͏͏ current͏͏ consumer͏͏ trends.
Continue͏͏ Exploring:͏͏ Levi Strauss reports͏͏ 8%͏͏ revenue͏͏ increase͏͏ in͏͏ Q2͏͏ FY24,͏͏ reaching͏͏ $1.44͏͏ Billion
Cost-Cutting͏͏ Measures͏͏ in͏͏ Motion:
The͏͏ company͏͏ has͏͏ already͏͏ outlined͏͏ cost-cutting͏͏ plans͏͏ to͏͏ enhance͏͏ profits͏͏ and͏͏ eliminate͏͏ underperforming͏͏ businesses,͏͏ including͏͏ the͏͏ Denizen͏͏ brand͏͏ and͏͏ its͏͏ footwear͏͏ category͏͏ in͏͏ certain͏͏ regions.
It͏͏ has͏͏ also͏͏ reduced͏͏ its͏͏ corporate͏͏ workforce͏͏ and͏͏ consolidated͏͏ operations͏͏ in͏͏ Europe͏͏ as͏͏ part͏͏ of͏͏ its͏͏
cost-cutting͏͏ efforts.
This͏͏ enabled͏͏ the͏͏ company͏͏ to͏͏ report͏͏ a͏͏ third-quarter͏͏ adjusted͏͏ profit͏͏ of͏͏ 33͏͏ cents͏͏ per͏͏ share,͏͏ surpassing͏͏ the͏͏ expected͏͏ 31͏͏ cents͏͏ per͏͏ share,͏͏ according͏͏ to͏͏ analysts’͏͏ estimates͏͏ compiled͏͏ by͏͏ LSEG.
As͏͏ part͏͏ of͏͏ the͏͏ strategic͏͏ review͏͏ process,͏͏ the͏͏ company͏͏ has͏͏ appointed͏͏ Bank͏͏ of͏͏ America͏͏ as͏͏ its͏͏ financial͏͏ adviser͏͏ and͏͏ has͏͏ not͏͏ established͏͏ a͏͏ deadline͏͏ or͏͏ definitive͏͏ timetable͏͏ for͏͏ its͏͏ completion.
Levi͏͏ has͏͏ indicated͏͏ that͏͏ higher-end͏͏ consumers͏͏ in͏͏ the͏͏ U.S.͏͏ are͏͏ showing͏͏ incremental͏͏ signs͏͏ of͏͏ pressure,͏͏ while͏͏ consumers͏͏ in͏͏ Europe͏͏ are͏͏ also͏͏ being͏͏ particularly͏͏ cautious,͏͏ negatively͏͏ impacting͏͏ sales͏͏ of͏͏ its͏͏ apparel,͏͏ especially͏͏ within͏͏ the͏͏ Dockers͏͏ brand.
Dockers͏͏ Sales͏͏ Decline͏͏ Amid͏͏ Broader͏͏ Revenue͏͏ Shortfall:
Sales͏͏ of͏͏ Dockers͏͏ experienced͏͏ a͏͏ 15%͏͏ decline͏͏ in͏͏ the͏͏ third͏͏ quarter.͏͏ The͏͏ brand͏͏ accounted͏͏ for͏͏ approximately͏͏ 5%͏͏ of͏͏ the͏͏ reported͏͏ revenue͏͏ of͏͏ $1.52͏͏ billion,͏͏ which͏͏ fell͏͏ short͏͏ of͏͏ analysts’͏͏ estimates͏͏ of͏͏ $1.55͏͏ billion.
“I͏͏ believe͏͏ Michelle͏͏ Gass,͏͏ the͏͏ CEO͏͏ of͏͏ Levi’s,͏͏ is͏͏ intensifying͏͏ the͏͏ focus͏͏ on͏͏ the͏͏ core͏͏ brand͏͏ that͏͏ generates͏͏ the͏͏ majority͏͏ of͏͏ revenues,”͏͏ said͏͏ Dana͏͏ Telsey͏͏ of͏͏ Telsey͏͏ Advisory͏͏ Group.
