The Strategist

Levi Strauss IPO: The jeans giant is back

03/01/2019 - 03:53

In February, Levi Strauss & Co, the first company to receive a patent for the production of blue jeans, filed an IPO application. The placement with a preliminary volume of $ 100 million will be held on the NYSE under the ticker LEVI.

Mr & Mrs Cossey via flickr
Mr & Mrs Cossey via flickr
The mature giant is targeting new markets and niches. The plans include expansion to China, India and Brazil, as well as strengthening positions in the segment of jeans for women, which is growing by more than 20%. Levi Strauss traded on the open market in 1971–1985 and is now regaining public status. The cult brand gained fame after World War II, having received a powerful impetus to development thanks to the American military that "advertised" this brand throughout the world.

Levi’s products are sold in more than 50,000 retail stores in 110 countries. The company intends to seriously increase its share in the markets of China, India and Brazil. Nowadays, Levi Strauss generates only 3% of revenue in China, despite the fact that the country occupies 20% in the world. Over the past two years, the line of women's clothing has been growing by 25-29% per year, and income from women's tops has increased by 46% CAGR since 2015.

Sales of jeans are increasing by 5% per year, and the apparel industry as a whole adds only 1%. Levi’s IPO may take place in the first quarter of 2019, and the market is looking forward to it with optimism. This is due to the fact that sales of denim in general are ahead of the sewing industry (according to the NPD Group, the growth of the denim clothing segment was 5%, and the entire clothing industry - only 1%).

Also, analysts expect a gradual return of fashion to skinny jeans, the line of which is quite wide in the company. Levi’s is not the only company in the sector that has decided to enter the market this year. VF Corp., which owns competing brands Lee and Wrangler, announced that it will separate its denim brands into a separate public company called Kontoor Brands.