WSJ: Dockers Sale Done, Levi To Focus On Jeans

Sep 27, 2004

By George Anderson

A report in the Wall Street Journal says Levi Strauss has agreed to sell its Dockers clothing brand to the Vestar Capital Partners, a private equity firm, and an apparel
industry veteran, Eric Rothfeld.

According to the WSJ report, Mr. Rothfeld ran the denim-maker Sun Apparel, which manufactured its own brand products as well as producing private label items for retailers
such as Kmart. He was also said to have played a significant role in building Ralph Lauren’s Polo Jeans business.

Levi Strauss has been looking to sell Dockers to pay down debt and concentrate on its core jean business. The company was seeking $900 million for the brand but the WSJ
report suggested the final price might drop closer to $700 million based on Dockers’ recent performance. The brands’ sales were down nine percent last year.

Dockers and Levi Strauss’s jeans business have both been hurt in recent years by private label and other less-expensive similar goods sold primarily through mass merchants. Levi’s
introduced its Signature brand jean, developed for discounters, to help the company recapture business previously being lost through that class of trade.

Moderator’s Comment: Will the reported sale of the Dockers’ brand help Levi Strauss turn its fortunes around? What
else must the company do to recapture its past glory i.e. market share?

According to the WSJ report, Levi Strauss’s debt burden at the end of the second quarter was $1.96 billion. The $700 million to $900 million for
the Dockers’ sale will help but it certainly will not eliminate the challenge the company faces.

George Anderson – Moderator

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