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Levi’s Set for Return to Public Market as IPO Action Heats Up

More than 145 years after making the first pair of blue jeans, Levi Strauss & Co. is hoping investors are ready to buy into a company based on more than just denim.

Levi Strauss will price its initial public offering Wednesday and make its second public market debut the following morning on the New York Stock Exchange. Early indications suggest the share sale is going well: Investors have been advised to place their orders above the marketed price range to avoid missing out, a person familiar with the matter said earlier.

Shares are being offered at $14 to $16 apiece in the IPO, which could raise as much as $675 million and be the largest U.S. listing so far this year—at least until ride-sharing giant Lyft Inc. launches its own offering next week.

Levi Strauss’s return to the public market—it was taken private by Strauss descendants the Haas family in 1985—comes after a long turnaround that hit a high-water mark last year when sales increased 14 percent to $5.6 billion, its best growth in more than a quarter century. The company benefited from a rebound in the global jeans market and a years-long push to diversify its offerings. Sales of tops surged 38 percent and now account for 20 percent of the business.

Becoming more than a jeans brand is crucial to the long-term health of the company if it’s going to withstand disruption from fashion trends and competition. In the 1990s, the rise of khakis and trousers slowed growth, while the past few years has seen consumers shift toward more comfy and casual looks—dubbed athleisure—that have turned yoga gear and jogging pants into everyday wear.

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Levi Strauss has also pitched investors on what it sees as a big opportunity in China. The company generates about 17 percent of its revenue in Asia and just 3 percent comes from world’s second-largest economy. That’s led Chief Executive Officer Chip Bergh, who joined in 2011 after almost three decades at Procter & Gamble Co., to see a path to $10 billion in sales.

Still, there are plenty of risks. The global economy, including China, is slowing down. Many brands have aspired to become head-to-toe properties, only to fail. And even with the acceleration of growth over the past two years, annual sales gains averaged less than 3 percent since Bergh’s arrival. Above all, the iconic brand is still closely tied to jeans, a mature and competitive category.

“They’ve really improved the position of the business,” said Michael Zuccaro, an analyst for Moody’s Investors Service who covers the company’s publicly-traded bonds. “Nonetheless, they are still concentrated in pants and men’s jeans, which is still a concern.”

Shares will trade under the ticker “LEVI”.

Levi’s IPO is set to be the first in a wave of high-profile listings over the next few months that could make 2019 a bumper year for going public. Lyft will price shares in its already oversubscribed offering on March 28, with larger rival Uber Technologies Inc. expected to follow suit before the end of the first half. Office chat software maker Slack Technologies Inc. and food-delivery app Postmates Inc. are also considering listings.