Levi Strauss & Co has commenced a strategic review of its Dockers brand after reporting a mixed bag of results for the third quarter.
The company’s revenues for the quarter ended August 25 were flat at $1.5 billion on a reported basis, but up 2 per cent on constant currency. Excluding the impact from the sale of the Denizen business, revenues were up 1 per cent on a reported basis.
Levi’s sales rose 5 per cent, marking a significant acceleration from the first half and the highest growth in two years. Meanwhile, Dockers was the main underperformer with a 15 per cent sales decline.
“Based on the continued strength of the Levi’s brand, we expect sequential progression to continue into Q4 as we accelerate revenue and profitability,” said Harmit Singh, chief financial and growth officer.
“We are also taking decisive actions to address the areas where we’ve underperformed, including our decision to evaluate strategic alternatives for Dockers.”
Those alternatives include a potential sale or another “strategic transaction”. The company has retained Bank of America as its financial advisor.
By region, Levi Strauss’ sales in the Americas decreased 1 per cent (up 2 per cent if excluding the exit of Denizen). Europe revenues improved 6 per cent, while Asia revenues were flat.
On the bottom line, net income increased from $10 million last year to $21 million. The company expects revenue to grow approximately 1 per cent for the full year.
