LEVI Strauss is getting interest in its Dockers brand from potential buyers, according to chief financial officer Harmit Singh.
“Phones are ringing, which is good news,” Singh said, adding the company expects the process to take six to nine months. He said Levi is looking for a buyer who can take Dockers “to the next level while we focus on taking Levi’s to the next level”.
It’s the second time Levi has sought to unload the business. Two decades ago, when Dockers sales were around US$1 billion, Levi failed to sell the khaki brand after it did not get “appropriate” offers. Dockers sales are on pace to be about a third of that this year.
The sale is part of Levi’s efforts to win over investors by selling more products through its own stores and websites and expanding its Beyond Yoga brand. So far this year, Levi’s stock has underperformed the S&P 500 Index, and Wall Street was disappointed by its most recent earnings report.
Despite Dockers’ declining sales, Singh said Levi is well-positioned to sell the brand because the parent company has set it up with its own management.
“The difference between then and now is that Dockers has a dedicated management team,” Singh said. “In the past, Dockers was run by the people running Levi’s,” he said, adding that the separate team was established about two years ago.
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The goal at the time was to operate the brand as it would be run under private equity, with the aim of either turning the brand around or potentially facilitating a handover to a buyer. Given sales have continued to decline, Singh said: “It did not work over the last two years”.
“The best definition of insanity is doing the same thing again and again and expecting a different result,” he said. “And so we said it is probably a good time to exit and narrow the focus.”
Despite Dockers’ struggles, he said he’s optimistic the business could do well with a new owner, citing his previous experience with spinoffs – including when he worked with PepsiCo during the spinoff of the restaurant chains that became Yum! Brands.
As part of its strategy to focus on higher-growth areas, Levi has already moved to stop selling footwear and its Denizen brand, which was sold at Target. BLOOMBERG
