Retailers may be struggling by Levi Strauss is not.
Levi Strauss, the San Francisco–based maker of iconic Levi’s blue jeans and Dockers khaki pants, went public for the second time in March, listing on the New York Stock Exchange under the symbol LEVI.
The company, which invented rugged denim blue jeans with rivets in 1873 and patented them as “waist overalls,” has enjoyed strong sales and rising profits in recent years, bucking a downturn in the retail industry. Last year, it generated $5.6 billion in revenue, from sales in more than 110 countries.
Levi Strauss first went public in 1971, before being taken private again in 1985 via a leveraged buyout. In its latest initial public offering (IPO), the company raised $623 million, excluding an underwriters’ allotment. In its filing with the Securities and Exchange Commission, Levi Strauss said the proceeds would be used for general corporate purposes and to “drive further brand and category diversification,” possibly including the purchase of trendy brands.
Today, in addition to jeans and casual dress pants, the company sells tops, shorts, skirts, jackets, footwear and related accessories. Its gross margins have climbed to a 20-year high, and it has opened many new stores. Levi Strauss attributes its record margins to “improvements in its supply chain and inventory management, as well as a shift to its higher-margin direct-to-consumer channel and Europe segment,” according to Renaissance Capital.
The company’s current strategy is unlikely to change under the new, public ownership. The IPO allowed descendants of the founder’s family to cash out a portion of their stake while retaining control under a dual-class shareholding structure, whereby each class B share is entitled to 10 votes. Some of the proceeds will also be reinvested in the business, including further expansion overseas, where Levi Strauss already gets 45% of its revenue. The company plans to boost its market share with women and online, and to grow its current 3% market share in China, which represents 20% of the global apparel market.
The underwriters of the IPO included Goldman Sachs, J.P. Morgan, Morgan Stanley, Evercore, BNP Paribas, Citi, Guggenheim, HSBC, Drexel Hamiltorn, Telsey Advisory and the Williams Capital Group.
