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Fitch Upgrades Levi Strauss & Co. as Growth Improves

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Credits ratings firm Fitch Ratings has upgraded Levi Strauss & Co.‘s long term issuer default rating.

The upgrade has the rating now at “BB+” from “BB.” Fitch also said the rating outlook is stable. Fitch said the upgrade recognizes Levi’s stable performance, with accelerating growth in revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) in 2018, as well a meaningful cash flow generation.

According to David Silverman, the primary analyst who wrote the upgrade report, Levi’s top-line has accelerated, with 8 percent revenue growth in fiscal 2017, ended November 2017, and 11 percent growth expected in fiscal 2018.

“The company’s merchandising and branding efforts are bearing fruit, with strong growth across categories and geographies. Levi’s brand and offering are clearly trend-right currently, and the company is successfully exploiting opportunities to capitalize on this momentum through new product assortments, brand and celebrity collaborations, and square-footage expansion,” the analyst said.

He also cited the company’s “resilient business model in the face of apparel industry volatility,” noting the company’s three strategic initiatives. They are product innovation at its Levi’s men’s bottoms business and the Dockers brand in the U.S. at key wholesale accounts; expand Levi’s presence in less-penetrated product categories–such as men’s tops and outwear and women’s–and in new markets, such as Russia, India and China, and grow company-owned retail stores and online presence.

Silverman said Levi’s next debt maturity is $500 million of unsecured notes due 2025.

Levi has been a denim resource for 146 years, having the distinction of creating the first pair of jeans. Now a private company, it successfully completed an initial public offering back in 1971. The company is planning an IPO again for the first quarter of 2019, and is said to be hoping to raise between $400 million to $800 million.

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