SAN FRANCISCO, United States — Iconic jeans maker Levi Strauss is getting into the activewear game with the acquisition of Beyond Yoga, a fast-growing, premium athletic and lifestyle apparel brand based in the US.
The deal, for which financial terms have not been disclosed, will enable Levi’s to diversify its business and break into the $350+ billion activewear market — a strategy it predicts will add more than $100 million to its net revenue next fiscal year.
At a time when consumer uptake of premiumisation, casualisation and wellness trends continues to disrupt the apparel industry, Levi’s is not only looking to capitalise on the activewear market’s enormous growth potential but future-proof its business in the face of growing transformation.
Speaking about the acquisition, Harmit Singh, Chief Financial Officer at Levi Strauss & Co. explained: “Beyond Yoga is an excellent addition to our brand portfolio and will accelerate our long-term growth algorithm.”
He added: “This acquisition further strengthens Levi Strauss & Co’s revenue trajectory, enhances our gross and EBIT margins and is immediately accretive to our earnings. Given our strong liquidity position, this transaction, which is consistent with our capital allocation strategy, allows us to profitably scale a high-return, digital business.”
Founded in 2005 in Los Angeles, California, Beyond Yoga has more than doubled its revenue and grown profitability in a disciplined manner. The female-founded and run body-positive brand has become a hit with young, digitally native, female consumers that don’t particularly identify with Levi’s heritage and branding — a demographic Levi’s is desperate to connect with.
Currently, Levi’s women’s business accounts for roughly one-third of sales. Its goal is to grow that figure to 50%, according to CNBC. It has also been slow to adapt to the digital market. Beyond Yoga, in comparison, boasts digital sales that account for 77% of its business.
“The foundation the Beyond Yoga team has built, combined with Levi Strauss & Co’s resources, global reach and scale, make me confident that Beyond Yoga will become a powerful growth engine for Levi Strauss & Co. and help drive our strategic priorities,” noted Chip Bergh, President and Chief Executive Officer at Levi Strauss & Co.
“Beyond Yoga’s values-led approach to business, centred on inclusivity and authenticity, makes it a natural fit to our company portfolio,” he added.
And Levi’s isn’t the only one betting on the activewear boom in order to fuel growth.
Just last week, Wolverine World Wide — which operates one of the world’s largest portfolios of footwear and lifestyle brands — bought London-born athleisure retailer Sweaty Betty in a deal worth $410 million.
It plans to leverage the brand’s expertise and focus on female consumers to fuel growth and enhance its fast-growing e-commerce business.
Last month, sportswear retailer JD Sports acquired shares in British activewear brand Gym King. And in June, Canadian womenswear retailer Aritzia acquired a 75 percent stake in Vancouver-based activewear brand Reigning Champ.
Elsewhere, major retailers continue to launch their own activewear brands, from Target’s All in Motion, which generated $1 billion in sales in just one year to Kohl’s recently launched FLX, which it hopes will generate 30 percent of its total sales.
And judging by existing players like Lululemon, Gymshark, Athleta and Alo Yoga which continue to experience phenomenal growth, it’s a risk worth taking.