Iconic denim maker Levi's, best known for that staple of American casual wear — jeans — on Thursday said it will pay an undisclosed amount of cash to acquire activewear brand Beyond Yoga.
The company said in a press release that it expects the acquisition "to be immediately accretive to gross margins, EBIT margins" and earnings, and next year to add $100 million to net revenue.
Beyond Yoga will operate as a standalone division with co-founder Michelle Wahler as chief executive, reporting to Levi's CEO Chip Bergh.
Consumers, who for years now have been willing to wear denim to venues, events and circumstances that once called for more formal attire, are now also trading in their skinny jeans for baggier styles. Companies like Levi's and Kontoor (maker of Wrangler and Lee), are benefiting, especially now that many shoppers are eager to change out of their sweats and into something slightly more structured. Jeans, particularly "mom jeans," fit the bill.
But Levi's appears to be betting that activewear and athleisure, like jeans, are also becoming a staple of American apparel. A DTC enterprise founded in 2005, Beyond Yoga offers inclusive sizes from XXS-4X. In the last three years, the brand has more than doubled its revenue and will be able to scale profitably within Levi's portfolio, according to a statement from Levi's CFO Harmit Singh. Levi's net revenue last year reached $4.5 billion, via worldwide operations that include its wholesale through mass chains, department stores and e-retailers and some 3,000 retail stores and shop-in-shops.
The move signals stiffer competition on the horizon for Gap Inc.'s Athleta brand, which has also benefited from the popularity of athleisure. That business, also focused on sizing inclusivity and female empowerment, recently wooed gymnastics phenom Simone Biles and track and field star Allyson Felix from Nike.