Jeans maker Levi Strauss files to make stock market comeback after over 30 years

Levi's, one of the world's biggest denim brands and the inventor of blue jeans, faces rapid changes in consumer tastes as people shop for cheaper store brands and athleisure apparel.
Levi's, one of the world's biggest denim brands and the inventor of blue jeans, faces rapid changes in consumer tastes as people shop for cheaper store brands and athleisure apparel.PHOTO: AFP

NEW YORK (REUTERS, BLOOMBERG) - Jeans maker Levi Strauss & Co on Wednesday (Feb 13) filed documents to list itself on the New York Stock Exchange, seeking to return to public markets after more than three decades.

Levi's, one of the world's biggest denim brands and the inventor of blue jeans, faces rapid changes in consumer tastes as people shop for cheaper store brands and athleisure apparel.

Last year, rival VF Corp said it would spin off its less profitable Wrangler and Lee jeans business into a publicly traded company, allowing it to focus on Vans and its outdoor wear businesses to help improve profit margins.

The 145-year-old company, which intends to list as "LEVI", set a placeholder amount of US$100 million to indicate the size of the IPO. The final size of the IPO could be different.

The San Francisco, California-based company could be valued at around US$5 billion when it debuts, a CNBC report said in November.

BIGGEST SHAREHOLDER

The Haas family, which traces its lineage to company founder Levi Strauss, owns almost 59 per cent of Levi's. A market valuation of US$5 billion would give the family a combined net worth of at least US$2.5 billion.

 
 

Bavarian-born Strauss emigrated to New York in 1848 and was soon lured to San Francisco by the California Gold Rush. Failing to find much gold, he started a West Coast branch of his brothers' wholesale dry goods business and called it Levi Strauss & Co. One day he received a letter from a customer, a Nevada tailor named Jacob Davis, who'd started designing pants with rivets to make them last longer. He needed a business partner and Strauss was eager to collaborate.

The patent for the first pair of blue jeans was granted to the partners in 1873. When Strauss died unmarried and childless in 1902, the bulk of his US$6 million estate (worth US$175 million in today's dollars) passed to his four nephews and other relatives.

His nephews carried on the business, rebuilding it from scratch after the firm's headquarters and factory were destroyed by the deadly 1906 earthquake and fire. They also oversaw the release of its first product for women, "Freedom-Alls," in 1918.

But it wasn't until after World War II that Levi's gained renown as a fashion product, having gotten a boost in global exposure from US soldiers sporting the brand. Western movies and Hollywood stars like James Dean further burnished its fashion cred, making the rugged pants a cultural touchstone of the Baby Boom era.

The company's biggest individual shareholder is Mimi Haas with a 16.7 per cent stake, according to a prospectus. She's a vice chair of New York's Museum of Modern Art and the widow of Levi Strauss's grandnephew by marriage, Peter Haas Sr, who worked at the family business for 60 years until his death in 2005. He and his brother, Walter, succeeded their father, Walter Sr, in running the business in the 1940s and helped oversee the first IPO in 1971. The family orchestrated a leveraged buyout 14 years later after revenue and profits sagged.

Other major shareholders of the business include Peter Haas's son, Peter Jr, and daughter Margaret, cousin Robert Haas and family members Daniel and Jennifer Haas.

Levi's is required to post quarterly earnings with US regulators as it its Japanese arm, Levi Strauss K K, is publicly traded in Tokyo.

In its latest report, the American apparel company said sales rose nearly 9 per cent to US$1.59 billion. Its filings also show that it has halved its debt load over the last two years.

Levi's sells its products in more than 50,000 retail locations, including about 3,000 standalone stores and shops-in-shops across 110 countries. It sells apparel under the Levi's, Dockers and Denizen brands.

Jane Hali, head of investment research firm Jane Hali & Associates, said she thinks it is a good time for Levi's to go public, as jeans - particularly fashion jeans - seem to be resonating with consumers.

Multi-brand specialty retailer American Eagle Outfitters Inc, for instance, has invested heavily in refreshing its jeans collection and has grown its total US jeans market share to 7 per cent, second only to Walmart Inc at 10 per cent, according to a Cowen and Company research note published Jan 15.

US teen apparel retailer Abercrombie & Fitch has also noted a growing demand for fashion denim.

"Denim is doing much better than it has in the past and Levi's has the ability to be mass market," Hali said, adding that Levi's will make its stock market comeback with a strong, diversified portfolio under its belt.

With Levi's IPO filing, the company joins a list of high-profile companies seeking to go public this year including ride-hailing companies Uber Technologies and Lyft, photo-posting app firm Pinterest and home-renting company Airbnb.

Goldman Sachs, JPMorgan, BofA Merrill Lynch and Morgan Stanley are part of a 12-member underwriting team handling the IPO.