By Jennifer Williams
Casual wear's takeover of the entire workweek and its ever more relaxed attire are changing the calculus for Dockers owner Levi Strauss.
Dockers helped drive the popularity of Casual Fridays starting in the 1990s with its khaki pants and other comfortable, work-friendly apparel. But Americans brought a new obsession with comfort back to the office after pandemic lockdowns ended, adding T-shirts and leggings to their professional wardrobes for any given day.
Now Dockers is on the block.
"We created Dockers in the mid-'80s. We created it when Casual Fridays took off," said Levi Strauss Chief Financial and Growth Officer Harmit Singh. But the brand hasn't grown in the past two years as U.S. workers have embraced even more relaxed cubicle attire and the casual segment has moved toward athleisure, the CFO said.
"So our view is, maybe it's better in somebody else's hands," Singh said.
A Dockers sale would be consistent with Levi Strauss's recent efforts to prune businesses that aren't working, such as its lower-priced Denizen brand and footwear business. It would also free up resources to focus on areas such as Beyond Yoga and the direct-to-consumer Levi's business, which has seen 10 consecutive quarters of revenue growth.
"Our thinking is, let's focus on things that are higher growth, which is Levi's and Beyond Yoga," said Singh.
Dockers didn't start the relaxation of the modern workplace dress code. That can be traced back to a group of shirt manufacturers in Hawaii that in the 1960s started promoting Aloha Fridays, a pass for office workers to wear colorful, short-sleeve button-downs to work, according to an accounting of the shift from Levi Strauss.
Casual Fridays, as it became known, came to the mainland in the 1990s. But there were some who resisted, according to Levi Strauss's telling. Dockers even created its own guide to casual wear in 1992, which was mailed to roughly 25,000 corporate human-resources managers. Dockers sponsored fashion shows in offices and set up a hotline for workplace dress code emergencies.
A trend took hold.
By May 2004, the brand was doing roughly $1.4 billion in annual revenue, according to a regulatory filing.
But office dress codes have changed. Full- and part-time workers in the U.S. are more likely to dress casually while on the job than in more formal attire such as suits, according to a May survey from market research firm YouGov. Fifty-five percent of American workers said their work uniform includes either casual street clothes or leisure or athletic wear, or both. Meanwhile, 22% of workers wear business professional clothing, according to the data.
The shift has been aided by improvements in fabric, such as Lululemon Athletica's offerings that look convincingly like dress pants but are made with pliable material, said Laurent Vasilescu, a managing director covering the retail space at financial services firm BNP Paribas Exane.
"Those khakis are not coming back anytime soon," Vasilescu said, referring to the traditional stiff pant options.
Dockers has felt the pinch, with annual sales the past couple of years in the mid-$300 million range. Dockers's revenue declined 15% in the quarter ended Aug. 25 compared with a year earlier, while revenue at the core Levi's brand rose 5%.
Levi Strauss tried to sell Dockers in 2004, but called off the sale that October. The time is right to try again, Singh said. There is always a tendency to think you can turn a brand around, he said. "We gave it the old college try, but that didn't necessarily work."
The brand has potential despite declining sales, according to Singh. It's changed since the last sale attempt, now with its own management team focused on Dockers's growth and innovation to meet shoppers' wants, such as wares offering more stretch than the classic chinos. Dockers, which primarily sells through wholesalers, has expanded its direct-to-consumer offerings and is reaching younger shoppers, company leadership has said.
Dockers just needs the right buyer to "take it to the next level," according to Singh. Potential suitors have already expressed interest, he said, adding that he expects the process to move quickly, likely lasting less than a year.
Analysts agree that the Dockers brand can thrive with new owners.
"There's definitely room for these brands," said TD Cowen Managing Director Oliver Chen, referring to Dockers. "It just will take perhaps some more tweaking and then also just money and time and expenses."
Write to Jennifer Williams at jennifer.williams@wsj.com
(END) Dow Jones Newswires
October 29, 2024 06:00 ET (10:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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