"This proposed acquisition is a natural next step in our long-term growth strategy," says Robert Hanson, president of Levi Strauss Americas, in the company's release. "The outlet channel is poised for continued growth over the near- and long-term. We believe that this transaction will strengthen our ability to manage our brands' positioning effectively in the outlet channel."
NPD Group, a market research firm based in Port Washington, N.Y., says that while outlet sales represent a small portion of the total market, they are skyrocketing -- gaining more than 36% in the last 12 months.
Levi's move comes at an interesting time, because while both jeans marketers and specialty retailers continue to struggle, there's plenty of evidence that the denim market is much tougher than other types of discretionary spending, and shoppers just aren't letting the recession scare them away from buying new jeans. NPD says that the women's denim market gained a healthy 4% in the last 12 months to $8.03 billion, even as most stores posted dismal results. (Men's denim sales were flat at $5.32 billion.)
And it makes sense that bargain jeans are the hottest segment right now, gaining 46.9% in that period. But sales of pricier jeans are also rising -- with a gain of 6.5% in women's jeans that cost more than $50 a pair to $1.51 billion, and a 9.5% gain for men's jeans in that price category, with sales rising to $725.8 million.
Levi's, which is the No. 1 brand for both men and women, has also done well with its Levi Strauss Signature line -- ranked No. 3 for men, report NPD, and No. 8 for women. In its most recent results, the San Francisco-based company reported that net revenues fell 12% to $951 million.