Levi Strauss & Co, the inventor of blue jeans, might list its shares at a $5 billion valuation in a matter of months. Given consumers’ voracious demand for denim in recent months, the storied brand couldn’t have picked a better time to go public.
The company’s revitalised interest in a public listing – it dropped off the market in 1985 – reflects its recent progress and a rosier market backdrop. Its sales have risen for four consecutive quarters and amounted to almost $5 billion last year, motivating Levi's bosses to open a new flagship store in New York’s Times Square this month. The brand has benefited from growing nostalgia and a renewed appreciation for authenticity among consumers, who have tired of yoga pants and cheap, disposable denim from ‘fast fashion’ brands. Moreover, the jeans market shows few signs of fading; sales in the US climbed 5% last year, according to market research outfit NPD.
Shopping patterns at several of Levi's competitors suggest the brand has timed its public outing to perfection. Free People - a bohemian women’s fashion brand - enjoyed robust demand for its new Curvy Fit denim last quarter. Indeed, over half of the growth in its total apparel sales stemmed from bottoms. Richard Hayne, CEO of parent company Urban Outfitters, added that customers are buying two tops for every bottom - not three to one as usual - and expects the current 'bottom cycle' to continue for several years.
Similarly, Abercrombie & Fitch reported strong demand for its jeans, skirts and sweatpants last quarter, and sister brand Hollister notched record sales of jeans. American Eagle Outfitters also registered record sales in its jeans business last quarter, and CEO Chad Kessler predicts jeans will remain a critical growth driver for the brand over the next few years. And sales of bottoms at GAP-owned Athleta climbed more than 15% last quarter. Luckily for Levi's, it appears consumers can't get enough of jeans and other bottoms.
Levi’s iconic brand, rich heritage and denim expertise should allow it to capitalise on consumers who are hankering for timeless style and jeans that last. It's the perfect moment for the company to slip into a snug public listing.