Levi Strauss & Co. has revised its financial outlook and announced it is exploring the sale of its Dockers brand after reporting mixed quarterly results.
While the company’s Levi’s and Beyond Yoga brands performed well, Dockers sales dropped significantly, contributing to flat overall revenue for the quarter.
Levi’s third-quarter results showed a 5% rise in sales for its namesake brand, marking the strongest growth in two years. Beyond Yoga, acquired in 2021, also posted strong gains with a 19% increase. However, Dockers, which saw its sales plunge by 15%, dragged down the company’s overall performance.
Levi’s reported earnings per share of 33 cents, slightly above analysts’ expectations of 31 cents, but its revenue came in at $1.52 billion, missing the anticipated $1.55 billion. Shares of the company fell over 8% in extended trading following the announcement.
The denim giant reaffirmed its full-year earnings per share guidance of $1.17 to $1.27 but lowered its revenue growth forecast to around 1%, down from a previous range of 1% to 3%. This comes as the company faces challenges with its wholesale business, which saw a 6% decline in the quarter, as well as economic headwinds in key regions like the Americas and Asia.
Levi Strauss is also considering a potential sale or strategic transaction for its Dockers brand, which has struggled in recent years. The brand, launched in 1986 as a khaki alternative to denim, has seen reduced demand as fashion trends have shifted.
“The exit of Dockers will improve the company’s overall margins and minimize volatility in top-line growth,” said Levi’s CFO Harmit Singh.
The company has hired Bank of America to oversee the sale process. Meanwhile, Levi’s continues to focus on expanding its direct-to-consumer sales channels, which grew by 10% in the quarter, including 16% growth in e-commerce. The company aims to increase direct sales, which currently account for 44% of total revenue, to 55% in the future.
Levi’s also garnered attention with a new marketing partnership with pop star Beyoncé, following her release of the song “LEVII’S JEANS.” The collaboration is part of the company’s strategy to remain culturally relevant while expanding its lifestyle brand.
Despite challenges in its wholesale and international businesses, Levi’s remains optimistic about its core brands and direct-selling strategy. However, with the sale of Dockers on the horizon, the company is positioning itself for a streamlined future focused on its strongest performers.
CNBC, Bloomberg, Yahoo Finance contributed to this report.
