Levi Strauss is Acquiring Beyond Yoga to Get into Activewear

Denim giant Levi Strauss revealed this week that it has entered into an agreement to acquire the yoga apparel brand Beyond Yoga.

The move will launch the jeans maker into activewear.

While the company did not release information on the size of the all-cash deal, it is expected to close in the fourth quarter.

According to Levi Strauss, the acquisition will contribute more than $100 million to net revenue next fiscal year.

Shares were up about 1% on the news.

“We’ve been looking at acquisitions for quite some time, and the activewear space has obviously been very, very attractive,” Levi CEO Chip Bergh told CNBC in a phone interview. “We see enormous growth potential here. It puts us as a company smack into the high-growth, high-margin activewear segment.”

Once the deal is completed, Levi said Beyond Yoga will operate as a standalone division within its business. Co-founder Michelle Wahler will continue to serve as Beyond Yoga CEO, and will report to Bergh.

According to Levi CFO Harmit Singh, Beyond Yoga, which is headquartered in Los Angeles, has more than doubled its revenue while growing profitability over the past three years.
The company was founded by two women in 2005.

Levi plans to expand the Beyond Yoga brand outside of the United States and open more bricks-and-mortar stores. The deal should also help Levi grow its women’s business, which accounts for roughly one-third of sales today. The goal is to grow women’s to 50% according to Bergh.

“As some people start going back to the office, you’re not seeing suits anymore, you’re seeing people go into the office in more casual clothing, even athleisure-type products,” Bergh said.

“And it’s a truly global phenomenon.”

Levi shares are up 37% YTD.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.