An Undocking at Levi’s: Struggling Jeans Giant Puts Dockers on Block

Levi Strauss put the Dockers brand up for sale, its first dramatic move since hiring advisors Alvarez & Marsal in December to help right its ship.

Levi Strauss & Co put the Dockers brand on the block Tuesday

Levi Strauss & Co. put the Dockers brand on the block Tuesday.

Photo By WWD Staff

NEW YORK — The makeover has begun at Levi Strauss & Co., including a For Sale sign on its Dockers brand.

The proposed sale of Dockers is the first dramatic restructuring move at the struggling jeansmaker since it hired advisers Alvarez & Marsal in December to help correct its course.

Financial sources estimated the selling price for the women’s and men’s casual brand could range from $650 million to $1 billion, with potential buyers seen as including Kellwood, VF Corp. and perhaps sourcing giant Li & Fung.

Meanwhile, Levi’s executives said Tuesday that more restructuring moves are on the way as a result of a plan drawn up by the company and Alvarez & Marsal. The reorganization is likely to mean yet more job cuts at Levi’s, which in the last six months alone has reduced its workforce by more than 10 percent.

Levi’s has retained Citigroup Inc. to handle the Dockers sale, which officials said they hope to close by the end of the year. If the sale occurs, it will radically resize the San Francisco company. Dockers contributed $1 billion of Levi Strauss’ $4.15 billion in revenues last year. Adding in the sale of $360 million in licensed products, the worldwide revenues of Dockers approach $1.4 billion.

Sales at Levi Strauss have been declining since 1996, when they peaked at $7 billion.

Phil Marineau, president and chief executive officer of the company, said selling Dockers, a brand the company launched in 1986, would allow management to focus on the core Levi’s business.

“This wasn’t an easy decision, because Dockers is an historic brand and a very powerful one, but we have made the strategic decision to sell Dockers and use the proceeds to pay down debt and strengthen ourselves financially,” he said in a phone interview, adding the sale would make Levi’s more financially flexible.

While Levi’s officials acknowledged that lightening the company’s $2.02 billion debt load, mostly in the form of publicly traded bonds, would be a boon, they denied the sale was a survival move.

“We don’t have our backs up against the wall,” said Jim Fogarty, an Alvarez & Marsal official who joined Levi’s as chief financial officer in December. “We are looking at this next step to really make the company nimbler so it can invest in the future and grow, and not be constrained.”
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