Levi Strauss & Co. is planning to file an initial public offering 34 years after the Hass family -- the descendants of the eponymous founder of the company in 1853 -- took it private, which was 14 years after it had been taken public for the first time in 1971.
“According to its SEC filing, the San Francisco-based company plans to raise $100 million through the IPO, a placeholder amount used to calculate fees, but CNBC's Leslie Picker previously reported that the company is aiming to raise between $600 million and $800 million,” CNBC's Amelia Lucas writes.
Levi Strauss intends to list as “LEVI” on the New York Stock Exchange. Goldman Sachs & Co., Morgan Stanley and JPMorgan Chase & Co. will lead the IPO, according to the release announcing the company's intentions.
“Levi’s said that it plans to use the proceeds from going public for ‘general corporate purposes,’ including working capital, operating expenses and capital expenditures. According to the filing, the company sees the opportunity to expand its presence in emerging markets such as China, India and Brazil. A portion of the proceeds could go to acquisitions or other strategic opportunities, but the company said that it has no current plans to do so,” Lucas adds.
Definitive plans are one thing; aspirations quite another. The San Francisco-based company will indeed be “looking to go beyond denim,” as Suzanne Kapner and Maureen Farrell put it in the Wall Street Journal. “Levi has recognized that they need financial flexibility to figure out the next chapter for the brand,” Joel Bines, a managing director of consulting firm AlixPartners, tells them.
Indeed, “the news of the IPO was well received by retail analysts who said the company’s brand is one of the few well-known and global enough to withstand the shift to online shopping,” writes Shwanika Narayan for the San Francisco Chronicle.
“If you look across the apparel and footwear space, only a few companies like Nike and Adidas are well known all over the world. I would put Levi’s in that group of companies,” Bloomberg Intelligence equity analyst Chen Grazutis tells Narayan.
“The San Francisco-based company is still the largest seller of jeans in the world. In the U.S., it has a 12.1% share of the $16.68 billion denim market, dwarfing the next-largest player, Lee and Wrangler parent VFCorp., which has a 4.8% share, according to Euromonitor International, the WSJ's Kapner and Farrell write. But “denim growth has stalled in recent years as more people opt for yoga and sweatpants, or premium brands such as Frame and AG Jeans.”
VFCorp last year announced that it was spinning off its jeans business into a separate company. In December, it said that it would be named Kontoor Brands Inc. — “a creative variation of the word contour … that will preserve each brand’s unique identity.”
As for Levi’s, “a lot of their opportunities are outside of denim, bringing the brand to other categories as well,” Bloomberg Intelligence’s analyst Grazutis tells Bloomberg’s Matthew Townsend.
“‘We believe we have a long runway for growth in both our tops and women’s categories,’ the company wrote in the filing. ‘In the longer term, we intend to increase our focus on expanding our other product categories such as footwear and outerwear,’” Mary Hanbury writes for Business Insider.
“These categories represented 6% of its net revenues in fiscal 2018, according to the filing. Levi's also plans to grow its direct-to-consumer business by adding new brick-and-mortar locations and rolling out its online shop in new markets,” Hanbury adds.
Not that the company isn’t already doing well enough as is.
“In its latest report, the American apparel company said sales rose nearly 9% to $1.59 billion. Its filings also show that it has halved its debt load over the last two years,” according to Reuters’ Aparajita Saxena, Bharath Manjesh, Uday Sampath Kumar and Melissa Fares.
“Levi’s sells its products in more than 50,000 retail locations, including about 3,000 standalone stores and shops-in-shops across 110 countries. It sells apparel under the Levi’s, Dockers and Denizen brands,” they add.
And the family that controls it is doing just fine itself.
“Although founder Levi Strauss did not have any children of his own, he left the business to his four nephews and it was passed down over the generations. After World War II, brothers Peter Haas, Sr. and Walter Haas, Sr. took over Levi’s and are credited with turning it into an international brand,” Forbes’ Will Yakowicz writes.
Fast-forward to now and “six members of the Haas family, which ranks among one of America’s richest clans, own a combined 63% of Levi’s, according to an SEC filing from the 165-year-old company. The largest shareholder, Mimi L. Haas, has a nearly 17% stake that’s worth at least $1 billion, Forbes estimates,” Yakowicz reports.