Levi Strauss & Co. (San Francisco) announced it is exploring the sale of its Dockers casual clothing brand to help pay down a heavy debt load.
The branded apparel company said selling Dockers, which generates annual revenue of about $1.4 billion, would help it focus on boosting its traditional Levi’s brand, as well as the Levi Strauss Signature clothing line that’s sold in discount retailers like Wal-Mart Stores Inc. and Target Corp.
The proposed sale comes as the privately held company, which reports earnings because of its outstanding bonds, has struggled to reverse seven straight years of sliding sales amid tough competition from more youth-oriented brands.
“We have made good progress in improving our competitiveness and financial strength, including taking cost and complexity out of our business, revamping our Levi’s brand products and marketing, and expanding our Levi Strauss Signature brand for value-conscious consumers,” says ceo Phil Marineau. “Selling the Dockers business would be a significant next step towards achieving our long-term financial performance goals for the company.”
Levi Strauss officials declined to say how much the company expected to raise from selling Dockers as it seeks to reduce a debt load, less cash, of about $2.02 billion. Levi Strauss gave no timetable for a sale, but said it could take several months.
The decision to explore selling the unit comes after Levi Strauss hired the outside turnaround specialist firm Alvarez & Marsal last December to help boost the jeans maker’s battered business. Levi Strauss said it has hired Citigroup Inc. to help in the potential sale of the Dockers unit.