Levi’s Keeps its Pants On

Levi Strauss & Co. (San Francisco) has decided not to auction off its Dockers brand, signaling the management belief that it can rejuvenate the 18-year-old casual clothing line.

Bolstered by continued cost-cutting and an uptick in sales, Levi’s fortunes have been improving recently, reducing the pressure on the company to dispose of Dockers. After a slow start this year, Levi’s has earned $52 million during its past two quarters, one of the company’s best stretches since its sales began to steadily erode more than seven years ago.

“The company’s improving financial position, particularly our stronger cash flow and bottom line results, contributed to our strategic decision to retain the Dockers brand,” said Levi’s cfo Jim Fogarty.

The change of heart comes more than five months after Levi’s announced it would divest its Dockers business and use the money generated from the sale to reduce its $2.2 billion debt. When Levi’s announced its plans in May, the company emphasized it still might hold onto the Dockers brand if the bidding didn’t generate an acceptable sales price. Levi’s maintains Dockers did attract plenty of interest, but none of the offers was evidently enough to convince the company to part with one of the world’s best-known clothing brands.

The closest Levi’s reportedly came to selling the brand was for an $800 million offer from an investment group that included the New York buyout firm Vestar Capital Partners.

Without providing specifics, Levi’s ceo Phil Marineau said the sales process helped Levi’s management crystallize its ideas on how to make Dockers more successful. “We believe that will create more value for … the Dockers brand by retaining the business and driving its continued development ourselves,” said Marineau.

Like its parent company, the Dockers brand had been struggling in recent years. In the United States, the brand’s sales have dropped 20 percent from last year through the first nine months of Levi’s current fiscal year.