Sat, Mar 23, 2019 - Page 10 News List

Levi’s surges 23% in Wall Street return


Levis Strauss & Co president and CEO Chip Bergh, second right, rings a ceremonial bell as executive vice president and chief financial officer Harmit Singh, right, smiles during the company’s initial public offering in New York City on Thursday.

Photo: Bloomberg

Iconic jeans company Levi Strauss & Co on Thursday made a hot return to Wall Street as it eyes international growth and more direct sales to consumers in the fast-changing retail environment.

Listing under the ticker symbol “LEVI,” shares of Levi’s surged at the opening before finishing at US$22.41, up nearly 32 percent above its initial public offering price.

The New York Stock Exchange relaxed its no-denim policy for the session, for which the opening bell was rung by jeans-clad executives from the San Francisco-based company.

Levi’s, which went private in 1985, had raised US$623 million in an initial public offering that priced above its initial target price.

CEO Charles Bergh, who joined Levi’s in September 2011 after a lengthy stint at Procter & Gamble Co, told CNBC that the brand faced a “throw-down moment” in 2014 as surging demand for soft “athleisure” pants took market share, especially among women.

The company brought staff from denim mills into its technology development center in San Francisco to address the problem.

“We understood what women were telling us: Wearing tights, that used to be a denim occasion,” Bergh told the network. “They wanted soft, stretchy, comfortable material that made them look great and gave them confidence.”

Engineers developed a more comfortable fabric and one that does not give women “baggy knees, which is their biggest disatisfier” that produced strong sales, Bergh said.

The return to public markets comes as apparel brands face continual churn in the retail landscape in the Inc era.

Just last month, 50-year-old US retailer Gap Inc, which also sells jeans, announced it was splitting into two companies to emphasize its “Old Navy” brand and de-emphasize stores under its namesake company.

Like other major brands such as Nike and Ralph Lauren, Levi’s has sought to make itself present at all major customer meeting points: Amazon and other online vendors; department stores such as Bloomingdale’s; and direct selling, whether at its own retail stores or online.

Bergh told CNBC he plans to use some of the proceeds from the offering to enhance the company’s e-commerce business, build out its brick-and-mortar presence and in general for “continued investment in building out our omnichannel footprint.”

In a securities filing, Levi’s also emphasized potential growth in China and other emerging markets.

Of Levi’s US$5.6 billion in last year’s revenues, more than half came from the Americas, while 29 percent came from Europe and just 16 percent from its “Asia” segment, which also includes the Middle East and Africa.

Levi’s said in the filing that China represents 20 percent of the global apparel market, but just 3 percent of its revenues, a potential growth market for which the company has tapped a new management team.

However, the filing also highlighted “a global trade war” as a risk, citing tariffs imposed by US President Donald Trump on several partners, including China and the EU, which imposed reciprocal tariffs, including on denim products.

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