Levi Strauss Considers Dockers Sale: What This Means For The Iconic Denim Brand

Levi Strauss & Co LEVI revealed on Wednesday its consideration of selling the Dockers brand. Following this announcement, the company’s shares experienced a 10% drop in after-hours trading.

What Happened: The iconic denim company is concentrating on expanding its core Levi’s brand and Beyond Yoga activewear line, Reuters reported.

“We are narrowing our focus to realize the full potential of the Levi’s brand as well as accelerate Beyond Yoga. Accordingly, we are undertaking an evaluation of strategic alternatives for the global Dockers business,” CEO Michelle Gass said during a post-earnings call.

Levi Strauss is in the mid of a transformation strategy, aiming to streamline its offerings and enhance sales through direct-to-consumer channels. The company has already exited less profitable ventures, including the Denizen brand and certain footwear lines, as part of cost-cutting measures.

In the third quarter, Dockers’ sales declined by 15%, contributing only 5% to Levi’s total revenue of $1.52 billion, which fell short of analysts’ expectations, according to the report. Despite this, Levi’s direct-to-consumer sales saw a 10% increase, fueled by strong demand for women’s denim apparel.

Levi Strauss has engaged Bank of America as its financial adviser for the Dockers review, with no set timeline for completion. The company anticipates mid-single-digit revenue growth in the fourth quarter, below the estimated 7.36% due to Dockers’ weakness and reduced consumer spending in China.

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Why It Matters: The announcement comes on the heels of Levi Strauss’ mixed third-quarter financial results, where the company reported earnings of 33 cents per share, surpassing the analyst consensus estimate of 31 cents. However, the quarterly revenue of $1.516 billion missed the expected $1.55 billion.

LEVI Price Action: According to Benzinga Pro, Levi Strauss shares are down 10.92%% after-hours at $19.75 after dropping 2.86% in Wednesday's regular trading session.

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Photo via Wikimedia Commons

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote