Levi Strauss (LEVI) Looks to Dump Iconic Brand

[View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Levi Strauss (LEVI) Looks to Dump Iconic Brand Blue jeans revolutionized fashion, and [Levi Strauss & Co. (LEVI)]( revolutionized blue jeans starting all the way back in 1873. Levi's jeans were such an iconic American brand that they would sell for 5x-10x face value on the Russian black market during the Cold War. Today, the company faces a different set of challenges as it grapples with fast fashion, fading brand loyalty, and a tightening consumer. After the latest quarter’s results, management dropped a bombshell… Levi's is eyeing the exit of its Dockers® brand, potentially ditching khakis to double down on denim. According to our TrackStar data, that got retail traders and investors reading up on the stock at an accelerated rate. So, does the latest 5% stock drop offer an opportunity or a warning? Levi Strauss’ Business Levi's reach extends across 110 countries, with its products gracing the shelves of over 45,000 retail locations. From rugged 501s to trendy cuts, Levi's outfits everyone from cowboys to rock stars. Levi Strauss & Co. carves up its empire into four key slices: - Americas (49% of total revenues) - The home turf, covering North and Latin America's jean scenes. - Europe (26% of total revenues) - Where denim meets haute couture across the continent. - Asia (18% of total revenues) - Bringing American cool to the Far East. - Other Brands (7% of total revenues) - The khaki kingdom of Dockers® and yoga-chic Beyond Yoga®. The latest quarter saw Levi's core brand buck the trend, growing 5% while overall revenues flatlined. Direct-to-consumer sales surged 12%, offsetting wholesale declines. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D633731?utm_medium=ic-nl&utm_source=123005 ) Brought to you by [Datalign Advisory]( [Is Your Financial Strategy Ready for Election Outcomes?]( [Datalign Advisory - Is Your Financial Strategy Ready for Election Outcomes?]( With Election Day just around the corner on November 6, the outcomes can reshape your financial plans. It’s essential to have a knowledgeable advisor by your side. Our expert-designed questionnaire will help you identify your unique financial goals and prepare for potential changes ahead. Stay informed and proactive — understanding how election outcomes affect your finances can make all the difference. Equip yourself with the insights you need to navigate this critical time confidently. [Connect with Datalign Advisory to take charge of your financial future today.]( Continued... So, let’s talk a bit about Dockers. Back in 1984, Dockers was a great brand that added value to Levi’s. Today, it’s lost its popularity and flare. Sales for Dockers dropped 15% YoY for the quarter. Levi’s could sell the brand or just shut down production as it did with Denizen. It’s all aimed at focusing on the core Levi’s brand and Beyond Yoga. The company’s latest marketing campaign features Beyoncé rocking their rivets, betting her star power can keep its jeans on top in an ever-changing fashion landscape. Financials [Financials] Source: Stock Analysis As a company, Levi’s has struggled to gain any meaningful traction with its sales. Outside of the post-pandemic surge, revenues are pretty much flat. While gross margins have improved, operating and profit margins declined, with the latter suffered from merger and restructuring costs as well as asset write downs. Consequently, free cash flow margin held constant, save for changes in accounts payable. After doubling in 2020 to $2.7 billion, total debt has declined to $2.3 billion. Although that’s still high, interest expense only accounts for 0.66% of revenues. With around $600 million in cash generated from operations and an annual CAPEX of $250 million, there has been plenty of money to pay the $200 million in dividends, yielding 2.7%, along with a 1.2% yield from share buybacks. Valuation [Valuation] Source: Seeking Alpha On a P/E basis, Levi’s is as expensive as they come, as is [V.F. Corp (VFC)](. But on a price-to-operating-cash-flow basis, it’s the second cheapest behind [Under Armour (UAA)](. What’s interesting is the Enterprise value to Sales ratio, which is right in the middle of the pack, whether looking at the trailing 12-month period or forward, implying the company is fairly valued compared to its peers. Growth [Growth] Source: Seeking Alpha The revenue numbers here tell the tale of an apparel industry struggling to find growth. None have achieved double-digit growth, while some are negative YoY, looking forward, or averaged out over the past 3-5 years. This pressure translated to inconsistent profitability, with many showing flat or declining EBITDA and EPS growth. Profitability [Profit] Source: Seeking Alpha Amongst the clothing companies listed here, Levi’s appears to do well in all categories, with [Ralph Lauren (RL)]( being the top in nearly every category. Other than Ralph Lauren, all of these companies show awful returns on equity, assets, and total capital. [Lucrative income source no longer reserved for the rich elite!]( Rampant inflation and reckless government spending have impacted almost every single American... But there’s one income source that the world’s smartest and wealthiest investors are collecting millions in extra income from — even as costs and rates stay high. And RIGHT NOW, any investor with a brokerage account can start collecting reliable, monthly payouts from the rich elite’s lucrative income source, too! I’ve revealed everything in a special briefing. [Get all the info here.]([Ad] Our Opinion 5/10 Buying a fairly valued company in a struggling industry isn’t an ideal investment. While Levi’s generates decent cash flow and is right in jettisoning Dockers, we don’t know if that will help the company turn things around. We’d rather put our money to work somewhere with better value, growth, or both. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D633731?utm_medium=ic-nl&utm_source=123005 ) Proprietary Data Insights Retail’s Top Apparel Stock Searches in the Last Month Rank Ticker Name Searches #1 [LEVI]( Levi Strauss & Co 5,664 #2 [VFC]( V.F. Corp 5,085 #3 [UAA]( Under Armour 3,454 #4 [RL]( Ralph Lauren Corp 2,762 #5 [CPRI]( Capri Holdings Ltd 2,614 #ad [Master the Art of Investing with The Juice!]( News & Insights Just Spilled - [Is This the Best Aerospace and Defense ETF?]( - [Diversify Your Portfolio: Beyond Stocks]( - [Will Constellation Energy (CEG) Go Nuclear?]( - [Will UnitedHealth (UNH) Hit $700 Per Share This Year?]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D633731?utm_medium=ic-nl&utm_source=123005 ) [We want to hear from you. Let us know your thoughts by clicking here]( [Ads] [InvestingChannel Logo](#) Follow us on: [Facebook Logo]( [LinkedIn Logo]( [Twitter Logo]( [Instagram Logo]( To ensure delivery of all emails, [allow us on your list](. Manage your subscriptions with our [preference center](. [Unsubscribe here.]( View our privacy policy [here](. 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