Levi's IPO could be worth $557 million at launch

Levi could have a triumphant return to Wall Street. The clothing company’s initial public offering (IPO) could be worth $587 million when the company returns sells shares after a 34-year hiatus.

Why would Levi’s IPO be so valuable?

Levi’s has been an iconic jeans brand since Levi Strauss created blue jeans in 1873. The 166-year-old clothing company also has stayed relevant by being featured in US music festivals like Coachella.

‘This approach has enabled the Levi’s brand to evolve with the times and continually reach a new, younger audience, while our rich heritage continues to drive relevance and appeal across demographics,’ wrote the company.

‘Sales to our top ten wholesale customers accounted for 27%, 28% and 30% of our total net revenues in fiscal years 2018, 2017 and 2016, respectively,’ said Levi’s in a statement.

‘If any major wholesale customer decreases or ceases its purchases from us, cancels its orders, reduces the floor space, assortments, fixtures or advertising for our products or changes its manner of doing business with us for any reason, such actions could adversely affect our business and financial condition,’ said Levi’s.

While Levi’s is perhaps best known for its men’s jeans, the company is appealing to women as well. Sales to women topped $1 billion a year because of the improved quality of its clothing material. Chief executive officer, (CEO), Chip Bergh, noted why Levi’s had success with female customers.

‘We now have super-soft, super-stretchy denim that women love. That’s what’s driving this double-digit growth rate that we’ve been seeing in our women’s business over the last couple of years,’ said Bergh.

What’s next for Levi’s IPO?

Levi’s stock will be available to stockholders, but will have a major difference. The IPO will have a dual-class structure in which Class A shareholders will have one vote for each share. The Levi Strauss family will be Class B shareholders and have 10 votes per share. That structure ensures that the Strauss family has controlling shares in the company.

‘Descendants of the family of Levi Strauss have the ability to control the outcome of matters submitted for stockholder approval, which will limit your [other shareholders’]ability to influence corporate matters,’ said the company in its IPO filing.