Levi Strauss announces strategic review of Dockers brand, including sale to Reuters

(Reuters) – Levi Strauss said on Wednesday it was considering selling its underperforming Dockers brand, known for chinos and khaki clothing.

Shares in the denim maker fell nearly 8 percent in extended trading after the company missed quarterly revenue expectations and announced a strategic review of Dockers.

Levi is in the midst of a strategy to operate with a narrower range, focusing on its core denim brand and producing apparel and accessories aligned with current consumer trends.

The company has already set out cost-cutting plans aimed at boosting profits and shedding underperforming businesses such as the Denizen brand and its footwear category in some regions.

It has also reduced its corporate workforce and consolidated operations in Europe as part of cost-cutting efforts.

That helped the company post adjusted third-quarter profit of 33 cents per share, beating expectations of 31 cents each, according to analyst estimates compiled by LSEG.

As part of the strategic review process, the company has retained Bank of America as its financial advisor and has not set a definitive deadline or timeline for its completion.

Levi signaled that the high-end consumer was seeing incremental signs of pressure in the US and that consumers in Europe were also extremely cautious, affecting apparel sales – mainly in the Dockers brand.

Dockers sales fell 15% in the third quarter. The brand contributed about 5% to reported quarter revenue of $1.52 billion, which missed analysts’ estimates of $1.55 billion.

“I think what Levi’s (NYSE: ) CEO Michelle Gass is doing is increasing the focus on the core brand that generates most of the revenue,” said Dana Telsey of Telsey Advisory Group.