Levi’s Is Exiting Footwear Business, But Sticking With Collaborations

CEO Michell Gass said the business was not core and being deprioritized as part of its Project FUEL productivity push.

Levi Strauss & Co. is going to stick to what it knows best and exit its footwear business. 

The switch comes as part of the denim giant’s Project Fuel productivity plan, which led to $116 million in severance and other charges in the first quarter and is intended to focus the business as it pivots for more direct-to-consumer business.

Michelle Gass, who became the company’s president and chief executive officer in January, said the company was “ deprioritizing and ultimately exiting” its footwear business, which is based in Europe and never reached significant scale.

“It’s a small business, it’s down trending — not our core competency,” Gass said in an interview. “That being said, we love doing collaborations and we’ve done many of them, Crocs recently, New Balance today.” 

Gass said there will be more to come on the collaboration front, which have proven to be successful, sometimes selling out immediately. 

Late last year, New Balance dropped a Levi’s collab that focused on the classic MT508 sneaker silhouette with a nod to mountain biking culture.

The shoe sported the famous Levi’s red tab. 

While Levi’s is getting out of the shoe business, it is expanding in apparel, pushing beyond its core jeans business and looking to grow with head-to-toe denim looks, tops, non-denim active styles and more. 

Levi’s direct-to-consumer revenues rose 7 percent percent in the first-quarter and accounted for 48 percent of the total business in the quarter. On the other hand, wholesale sales were down 18 percent, or a 9 percent decline adjusting for the timing change to shipments a year ago.

Investors liked what they saw and sent shares of the company up 6.3 percent to $19.84 in afterhours trading on Wednesday.

Under Project FUEL, Levi’s plans to cut 10 to 15 percent of its corporate workforce, impacting 500 to 750 jobs.