Northwest Arkansas Democrat-Gazette
Jeans-maker Levi Strauss plans initial public offering
Levi Strauss & Co. has filed for an initial public offering for $100 million, a placeholder amount that’s used to calculate fees and that typically changes. CNBC reported that the denimmaker is looking to raise $600 million to $800 million.
The San Francisco-based company, whose bluejeans earned a patent 145 years ago, announced Wednesday that it intends to use the proceeds from an IPO for “general corporate purposes, including working capital and capital expenditures.” It may also use the cash for “acquisitions or other strategic investments, although we do not currently have any plans to do so.”
It was a public company from 1971 until 1985, when it was taken private in a leveraged buyout.
The IPO would be led by Goldman Sachs, Morgan Stanley and JPMorgan Chase.
The company’s ticker would be LEVI.
The announcement roiled the shares of apparel companies: American Eagle Outfitters fell 1.5 percent, The Gap slipped 0.12 percent and Urban Outfitters fell 1.8 percent.
Levi Strauss is looking to tap the market at a time of increased competition for the denim industry. Consumers are buying more athletic apparel such as yoga pants — and that has eaten into the cash they spend on jeans. Still, demand for denim has improved recently, according to Bloomberg Intelligence analyst Chen Grazutis.
The denim market “is better than a couple of years ago,” Grazutis said. “It’s steady, with low-single-digit growth.”
Levi Strauss has been expanding overseas, with 45
percent of its sales now being made outside the Americas. In its fiscal year that ended in November, its revenue hit $5.6 billion. It earned $283.1 million, or 73 cents per share, putting it about on par with Harley-Davidson — another iconic U.S. company — in terms of size.
Levi Strauss has said it sees a “significant opportunity” to boost its presence in emerging markets such as China, India and Brazil. China represents about 20 percent of the global apparel market but only about 3 percent of Levi’s revenue, according to the company’s filing.
The company is very reliant on wholesale channels, with almost two-thirds of its revenue in 2018 coming from there. But its diverse customer base, where no vendor accounts for more than 10 percent, may be seen as a strength by investors.
According to filings, the company sees opportunity for growth in women’s apparel and tops.
“A lot of their opportunities are outside of denim, bringing the brand to other categories as well,” Grazutis said.
The Haas family, which traces its lineage to founder Levi Strauss, owns almost 59 percent of the company.
The Bavarian-born Strauss immigrated to New York in 1848 and was soon lured to San Francisco by the California Gold Rush. Failing to find much gold, he started a West Coast branch of his brothers’ wholesale dry-goods business and called it Levi Strauss & Co. One day he received a letter from a customer, a Nevada tailor named Jacob Davis, who had started designing pants with rivets to make them last longer. He needed a business partner, and Strauss was eager to collaborate.
The patent for the first pair of bluejeans was granted to the partners in 1873.
But it wasn’t until after World War II that Levi’s gained renown as a fashion product, having gotten a boost in global exposure from U.S. soldiers sporting the brand. Western movies and Hollywood stars like James Dean further burnished the company’s fashion cachet, making the rugged pants a cultural touchstone of the baby-boom era.