(Reuters) – Levi Strauss Co said on Wednesday it was considering selling its underperforming Dockers brand, known for its khaki clothing.
Shares of the denim maker fell nearly 8% in extended trading after the company missed quarterly revenue forecasts and announced a strategic review of Dockers.
Levi is in the middle of a strategy to operate with a tighter assortment while focusing on its core denim brand and producing apparel and accessories that align with current consumer trends.
The company has already put in place cost-cutting plans aimed at boosting profits and getting rid of underachievers such as the Denizen brand and its footwear category in some regions.
It also reduced the company’s workforce and consolidated operations in Europe as part of cost-cutting efforts.
That helped the company achieve third-quarter adjusted earnings of 33 cents per share, beating expectations of 31 cents per share, 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 specific deadline or timeline for its completion.
Levi’s noted that the premium consumer was seeing increasing signs of pressure in the US and that consumers in Europe were also very cautious, which hurt its apparel sales – particularly at the Dockers brand.
Dockers’ sales saw a 15% decline in the third quarter. The brand contributed about 5% of the quarter’s reported revenue of $1.52 billion, which fell short of analyst estimates of $1.55 billion.
“I think what Michelle Gass, CEO of Levi’s (NYSE:) is doing is strengthening the focus on the core brand that generates the majority of revenue,” said Dana Telsey of Telsey Advisory Group.
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