Can Levi’s Win the D2C Game? Brand Bets Big on Direct Connection With Consumers

Levi Strauss & Co. is evaluating the possible sale of its Dockers brand amid its transformation to a direct-to-consumer (D2C)-first retailer.

Once a dominant name in khakis, Dockers has struggled to maintain its relevance in a marketplace driven by changing consumer preferences and the rise of athleisure, experts told PYMNTS. The decision to explore strategic options, including a potential sale, underscores the challenges of navigating a shifting fashion landscape.

In its third-quarter earnings results released Wednesday (Oct. 2), the company said sales of Levi’s denim rose 5%, while net revenues were flat at $1.52 billion. Dockers incurred a 15% decline.

During an earnings call, Levi Strauss & Co. President and CEO Michelle Gass told analysts that the company has retained Bank of America as its financial adviser to evaluate strategic alternatives for the global Dockers business, including a sale or other strategic transaction.

“Dockers is a high-quality business with significant future opportunity,” Gass said during the call. “It continues to be a global leader in the khaki category with strong, well-established American heritage. We are committed to identifying the right path forward that enables both LS & Co. and Dockers to reach their maximum potential and value.”

“In terms of our decision to explore strategic options for Dockers, this is all about focus,” she said later during the call. “… In terms of Dockers, this business has underperformed for some time. And so, as we announced, we’re going to look at alternatives with an intention to sell this business.”

Shifting Consumer Tastes

Industry experts told PYMNTS that divesting Dockers could allow Levi Strauss to concentrate on its strengths and invest in innovation that aligns more closely with current consumer trends.

Sudip Mazumder, senior vice president and retail industry lead for North America at digital consultancy Publicis Sapient, told PYMNTS the Dockers brand has failed to adapt to the market.

“The casual wear market has evolved, with a growing demand for athleisure-inspired styles and premium denim, trends that Dockers, known for its classic khaki apparel, has struggled to match,” he said. “Additionally, Levi Strauss is focusing on strengthening its core denim brand and expanding into higher-margin categories like women’s wear and performance apparel, areas where Dockers is less aligned. The competitive landscape, with brands like H&M, Zara and Gap offering trendy and affordable options, has also put pressure on Dockers’ market position.”

The establishment of the Dockers brand by Levi Strauss & Co. was textbook brand management, Don Roy, professor of marketing at the Jones College of Business at Middle Tennessee State University, told PYMNTS.

“The Levi’s brand played an endorser role for Dockers, boosting the brand’s credibility upon introduction,” Roy said. “However, consumer preferences and tastes have changed as evidenced by sales trends for Levi’s khakis business compared to its denim and yoga businesses. Selling the Dockers brand could be a win for Levi Strauss & Co., allowing it to focus on higher-performing businesses. It could also be a win for a potential buyer, giving it an apparel offering with established brand equity that could benefit from the marketing strategies of a new owner.”

D2C-First Pivot

Meanwhile, Levi Strauss is in the midst of a pivot to D2C-first retail and has made strides with a streamlined website and consumer experience.

“Direct-to-consumer revenues were up 16%, driven by double-digit growth in brick-and-mortar and eCommerce,” Levi Strauss & Co. Chief Financial and Growth Officer Harmit Singh said during the call.

It’s possible for the company to navigate its challenges and continue its drive for profitable growth, Mazumder said.

“Levi Strauss is rightfully planning to emphasize its core strengths and explore new opportunities while phasing out/selling the Dockers brand,” he said. “The company needs to double down on its denim offerings by investing in innovation and sustainability. Continuing to expand their footprint in adjacent categories, such as outerwear and accessories, will also be key to driving growth. Enhancing its digital presence through technology and personalized customer experiences needs to be another area of focus. Lastly, sustainability initiatives and strategic partnerships with other brands or influencers will help increase brand visibility and appeal to environmentally conscious consumers.”